The boy, 16, was seriously injured when he was stabbed as he walked down one of the streets in the company of some friends, Israel's Channel 2 quoted a police source as saying.

The source added that the boy was taken to hospital in critical condition, noting that police had started investigating the attack.

Arabs and Israelis have over the past months traded attacks against each other against the background of high tension in Jerusalem and repeated Israeli violations against Al-Aqsa Mosque compound.

Israeli authorities briefly closed the Al-Aqsa Mosque compound in late October following the shooting of an extremist rabbi in West Jerusalem.

The closure of Al-Aqsa, along with the killing by Israeli police of a young Palestinian man suspected of shooting the rabbi, has prompted angry Palestinian protests in East Jerusalem.

For Muslims, Al-Aqsa represents the world's third holiest site. Jews, for their part, refer to the area as the "Temple Mount," claiming it was the site of two Jewish temples in ancient times.

In September 2000, a visit to Al-Aqsa by controversial Israeli politician Ariel Sharon sparked what later became known as the "Second Intifada," a popular uprising against Israel's decades-long occupation in which thousands of Palestinians were killed.

Israel occupied East Jerusalem during the 1967 Middle East War. It later annexed the holy city in 1980, claiming it as the capital of the self-proclaimed Jewish state – a move never recognized by the international community.