Israeli police fired stun grenades towards Palestinians who threw rocks and petrol bombs at officers outside Jerusalem's flashpoint Al Aqsa Mosque on Friday, hours after Israel and Hamas reached a ceasefire in Gaza.

Police raids of the compound and violence against Palestinians during the holy month of Ramazan sparked the violence between Israel and Gaza's rulers Hamas, who after 11 days of fighting agreed to a truce early on Friday.

At noon, thousands of Palestinians gathered in the tree-lined compound surrounding the mosque for Friday prayers. Many stayed on to demonstrate in support of Palestinians in the Gaza Strip, cheering and waving Palestinian flags.

An Israeli police spokesman said that some of the Palestinians gathered threw stones and petrol bombs towards officers who had been stationed along the compound's gates. The officers responded by dispersing them, the spokesman said.

A Reuters photographer said police fired stun grenades towards the Palestinians. It was not immediately clear what set off the clashes.

The confrontations died down within about an hour, with Israeli police retreating to their positions at the compound's gates. Medics said 20 Palestinians were wounded, with two transferred to hospital for treatment.

The compound, which sits atop the Old City plateau known to Muslims as al-Haram al-Sharif, or The Noble Sanctuary, and to Jews as Temple Mount, is the most sensitive site in the Israeli-Palestinian conflict.

Israel sees all of Jerusalem as its eternal and indivisible capital, while the Palestinians want the eastern section, including the walled Old City, as a capital of a future state. Israel's annexation of East Jerusalem is unrecognised internationally.