US President Donald Trump's decision declaring Jerusalem as Israel's capital outraged Palestinian leaders who said it disqualified the United States as a peace broker, but was hailed by Israel as historic.
The city, however, remained calm on a cold and rainy evening after Trump's speech with no sign of protests, while Israeli authorities projected an American flag onto the walls in one area of Jerusalem's ancient Old City in celebration.
Palestinian demonstrations were set for the occupied West Bank on Thursday, and several thousand marched in the Hamas-run Gaza Strip on Wednesday night, burning US and Israeli flags while chanting "Death to America" and "Death to Israel".
Palestinian leaders in the West Bank were left fuming after Trump's speech and responded with outrage, declaring that the United States could no longer serve as Middle East peace broker.
President Mahmud Abbas called it "deplorable".
"These deplorable and unacceptable measures deliberately undermine all peace efforts," Abbas said in a speech after Trump's announcement.
He said it amounted to "an announcement of US withdrawal from playing the role it has been playing in the past decade in sponsoring the peace process."
Saeb Erekat, the secretary-general of the Palestine Liberation Organisation who long served as the Palestinians' top negotiator, said Trump had "destroyed the two-state solution".
"I think tonight he is strengthening the forces of extremists in this region as no one has done before," Erekat said, referring to Trump.
A decision like Trump's has been long sought by Israeli leaders, and Prime Minister Benjamin Netanyahu hailed it as "historic" and "courageous and just".
"This is a historic day," Netanyahu said in a video message released immediately after Trump's speech.
"We're profoundly grateful for the president for his courageous and just decision to recognise Jerusalem as the capital of Israel and to prepare for the opening of the US embassy here."
Netanyahu also called on "all countries that seek peace to join the United States in recognising Jerusalem as Israel's capital and to move their embassies here".
Netanyahu pledged no change to the status quo at Jerusalem's highly sensitive holy sites in the city sacred to Jews, Christians and Muslims – frequently the source of tension.
But while Netanyahu may have hoped to calm tensions with the pledge, the fallout from such a controversial decision concerning a city so intensely disputed remained unpredictable.
While Palestinians have been divided between armed Islamist movement Hamas and Abbas's Fatah in recent years, Jerusalem remains one of the issues that unites them.
Hamas had issued warnings in recent days as news of Trump's intentions spread, and it reacted to his speech on Wednesday with another.
"This decision will open the gates of hell on US interests in the region," Hamas official Ismail Radwan told journalists after Trump's announcement.
Separately, Palestinian officials said they switched off the lights to the giant Christmas tree in the West Bank city of Bethlehem, believed to be the city where Jesus was born, in protest. (AFP)