The Palestinian Health Ministry said a 30-year-old was killed and that more than 35 other people were wounded in skirmishes between Israeli forces and protesters along Gaza's border with Israel. It was the first death since the clashes started after President Donald Trump's speech on Wednesday.
Demonstrations also took place across the Middle East and around the Muslim world, many of them outside U.S. diplomatic outposts.
In the Jordanian capital of Amman, hundreds of protesters chanted "Jerusalem is Arab" and "America is the head of the snake."
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In the Pakistani city of Peshawar, more than 200 Islamists marched through the old city chanting anti-American slogans. U.S. flags and effigies of Trump and Israeli Prime Minister Benjamin Netanyahu were burned during a separate protest outside the Peshawar Press Club.
Several thousand protesters gathered in front of the U.S. Embassy in Kuala Lumpur, Malaysia, where another Trump effigy was set alight.
In Indonesia, hundreds attended a rally outside the U.S. Embassy in Jakarta. Some waved Palestinian flags, while others shouted "Allahu Akbar" — or "God is greatest."
Trump's announcement also put in motion a move of the U.S. Embassy to Jerusalem from Tel Aviv — a process that aides have said could take years.
The decision shows the president is “part of the problem, not part of the solution,” Ahmad Tibi, an Arab lawmaker in Israel’s Knesset, said Friday as a crowd began to gather at the city’s Damascus Gate. “Jerusalem is the capital of Palestine and that is the way peace can prevail."
Since the 1979 Camp David Accords, previous presidents have refused to recognize Jerusalem as the capital of Israel or move the U.S. Embassy. The U.S. approach has been that Jerusalem's status should be negotiated between the Israelis and Palestinians.
The Palestinians have sought the city's eastern sector, captured by Israel in the 1967 Mideast war, as the capital of a future independent state. They fear Trump's declaration essentially imposes on them a disastrous solution for one of the core issues in the Israeli-Palestinian conflict.
French Foreign Minister Jean-Yves Le Drian, who was due to meet Secretary of State Rex Tillerson for talks in Paris on Friday, said the U.S. had excluded itself from the Middle East peace process.
"Until now it could have had a mediation role in this conflict, but it has excluded itself a little. The reality is they are alone and isolated on this issue," he said.