JERUSALEM (Reuters) - An Israeli security guard killed a Palestinian in an Arab neighborhood of Jerusalem on Wednesday, triggering clashes between police and rioters, including in the compound of the al-Aqsa mosque.
Police said they entered the plaza to push back Palestinians who had thrown rocks at the nearby Jewish prayer site the Western Wall.
The Palestinians withdrew into the mosque, Islam's third-holiest shrine, and there were no immediate reports of casualties or further confrontations, a spokesman said.
Palestinian officials said the killing of a 32-year-old resident of East Jerusalem and subsequent police response had undermined nascent U.S.-sponsored peace negotiations.
Israeli authorities said the guard, who provided government-funded protection for a small Jewish settlement in the Silwan district, opened fire on dozens of Palestinians who had blocked and stoned his car before dawn.
"It was his life or theirs," said Ariel Rosenberg, spokesman for Israel's Construction and Housing Ministry.
Silwan residents took to the streets after the incident, overturning two cars, torching two others and throwing rocks at police and passersby. Police said they responded with teargas, water cannon and stun grenades.
At least seven Israeli civilians and a policeman were hurt in the clashes, police said. Silwan residents said two Palestinians were wounded in the initial shooting and more in later confrontations, but exact figures were not available.
Hundreds of mourners attended the funeral of the dead man, who had 5 children, and confrontations spread to the nearby Old City, where the al-Aqsa mosque abuts the Western Wall.
The flare-up came as peace talks between Israeli and Palestinians faced a crisis over the issue of Jewish settlements in the occupied West Bank and east Jerusalem.
A partial Israeli moratorium on settlement building expires on Sunday and Palestinians say they will quit the talks if Israel carries through with a decision not to extend the freeze.
Palestinian government spokesman Ghassan Khatib said Wednesday's violence was evidence of Israeli poor faith.
"This violent escalation by the Israeli occupying forces represent destructive measures that defeat the peace building agenda," Khatib said.
"These illegal actions of continuing to place heavily armed settlers in the heart of Palestinian neighborhoods, result in daily provocations and violence against defenseless and unarmed Palestinians and paves the way for such crimes to continue."
Israel captured East Jerusalem along with the West Bank from Jordan in the 1967 war and regards all of the city as its capital -- a status not recognized internationally. Many settlers claim a Jewish biblical birthright to the region.
Palestinians want East Jerusalem as the capital of the state they intend to establish in the West Bank and Gaza Strip.
Palestinians torched cars and threw stones and firebombs at Israeli police in Silwan last month after residents reported that settlers had tried to cross a mosque courtyard to reach an ancient spring where religious Jews conduct ritual ablutions.
Additional reporting by Ali Sawafta; Editing by Crispian Balmer