Clashes raged in east Jerusalem Thursday after Israeli police shot dead a Palestinian accused of trying to kill a Jewish hardliner, as Al-Aqsa mosque compound was closed for the first time in decades.
Israel said its closure of the flashpoint shrine, which is holy to Jews and Muslims alike, was a temporary measure aimed at calming tempers.
But Palestinian president Mahmud Abbas condemned it as an Israeli "declaration of war".
Wednesday night's shooting incident and the subsequent killing of the suspected gunman sent tensions soaring to a new high, following months of almost daily clashes between Palestinians and Israeli police in the occupied eastern sector of the Holy City.
Officials from the Islamic Waqf, which administers the esplanade, confirmed it was the first time such a measure had been taken since Israel seized Arab east Jerusalem during the 1967 Six-Day War.
"This dangerous Israeli escalation is a declaration of war on the Palestinian people and its sacred places and on the Arab and Islamic nation," Abbas said through his spokesman Nabil Abu Rudeina, warning it would only fuel "more tension and instability."
Jordan's Islamic affairs minister Hayel Daoud said it amounted to a case of Israeli "state terrorism". Under its 1994 peace treaty with Israel, Jordan has responsibility for Muslim holy sites in Jerusalem.
But a spokesman for Israeli Prime Minister Benjamin Netanyahu said the closure of the compound aimed "to prevent riots and escalation as well as to restore calm and status quo to the Holy Places".
Meanwhile, residents of the Jerusalem neighbourhood of Abu Tor were left reeling after an early police raid killed Muataz Hijazi, 32.
Israel said he was behind the attempt to gun down hardline activist Yehuda Glick, who has lobbied for Jewish prayer rights at the Al-Aqsa compound.
Police said Hijazi began shooting at officers who returned fire, killing him. But his family had a different version.
"They burst into the house shortly before 6:00 am, ransacked Muataz's room and then shot him on the roof," said his brother Khalil, 34.
Islamic Jihad said Hijazi was one of its militants.
Abu Tor straddles west Jerusalem and the Arab eastern sector, and borders the volatile district of Silwan that has been the focus of months of confrontations.
Inside, the house reeked of tear gas and on nearby sidestreets riot police fired gas canisters and rubber bullets at around 50 stone-throwing Palestinian youths in clashes that erupted after the shooting.
- 'More complex than IKEA' -
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In a diplomatic development the Palestinians claimed was related to the ongoing unrest in east Jerusalem, Sweden announced its formal recognition of a Palestinian state, becoming the first EU member in western Europe to do so.
Abbas hailed Stockholm's decision as "brave and historic."
Israeli Foreign Minister Avigdor Lieberman lashed out at the move as "deplorable," issuing a sardonic statement noting that "relations in the Middle East are a lot more complex than the self-assembly furniture of IKEA".
In a bid to restore order in Jerusalem, Netanyahu ordered a "significant increase" in police deployments but called for calm after rightwing groups reacted furiously to the attempted hit on Glick.
In the Old City, police fanned out in force, imposing a near lockdown in parts, an AFP correspondent said.
The assassination attempt followed months of tensions over the Al-Aqsa compound.
Although non-Muslims are authorised to visit the site, Jews are not allowed to pray there for fear it could disturb the fragile status quo.
Netanyahu again accused Abbas of incitement over remarks several weeks ago urging Palestinians to prevent Jews from visiting the Al-Aqsa compound "by all means".
"The international community needs to stop its hypocrisy and take action against inciters, against those who try to change the status quo," he said.
- American-born radical -
Meanwhile, around 50 far-right Jewish activists held a protest near the ramp leading to the only entrance for non-Muslims to the Al-Aqsa plaza, waving Israeli flags and shouting: "Liberate the Temple Mount!"
Police arrested four of them for trying to force their way on to the plaza.
Glick, who was in serious but stable condition after being hit by a hail of bullets, was shot as he came out of a conference on Jewish prayer at Al-Aqsa at a centre in west Jerusalem.
His assailant was employed at the restaurant there and had finished his shift shortly before the attack, the centre's deputy director Moshe Foxman told public radio.
The 48-year-old activist, who was born in New York, is a frequent visitor to the mosque compound and well-known for his lobbying efforts to secure Jewish prayer rights there.