Jerusalem: Israeli settlers forcefully took over 25 apartments in Arab east Jerusalem Tuesday, residents and Palestinian leaders said, with the new occupants claiming they had legitimately bought the properties.

The incident led to clashes between Arab residents and Jewish settlers in the Silwan neighbourhood, which is right outside Jerusalem`s Old City, near the flashpoint Al-Aqsa mosque compound.

It came after Israeli Prime Minister Benjamin Netanyahu and Palestinian president Mahmud Abbas traded inflammatory accusations at the UN General Assembly in New York, making the prospects of peace look even bleaker.

Mohammed al-Khayat, whose family owns three apartments in one Silwan building, told AFP settlers had broken the locks on empty properties and then changed them.

A police spokeswoman said clashes flared later when one Palestinian man tried to get into one of the buildings.

She said the properties belonged to settlers, who had presented documents proving they had purchased them.

Elad, a hardline settler organisation that seeks to increase Jewish settlement in Israeli-annexed east Jerusalem, told AFP that a company called Kendall Finance had purchased the properties.

But Mohammed Dahla, a lawyer representing the Palestinian owners, said they denied selling them.

A spokesman for Palestinian president Mahmud Abbas, quoted by news agency Wafa, slammed "the occupation by settlers of buildings in Silwan close to the Al-Aqsa mosque."

Silwan, an Arab neighbourhood were a few hundred hardcore settlers live, is often the scene of violence between the two sides, or between young Palestinians and police.

Senior Palestinian negotiator Saeb Erakat blamed Netanyahu for encouraging illegal Israeli settlement in Palestinian areas.

"They (settlers) translated Netanyahu`s speech into the act of taking over seven buildings in occupied east Jerusalem," he told AFP.

That was a reference to Netanyahu telling the General Assembly Monday that settlers were "not occupiers in the Land of Israel," invoking a "singular attachment to this land for over 3,000 years."

Later Tuesday, Housing Minister Uri Ariel visited the neighbourhood in solidarity with the settlers, Channel 10 television reported.

Ariel, a member of pro-settlement Jewish Home party, was shown performing a highly symbolic act, attaching to the doorpost of one dwelling a mezuzah, or small scroll of biblical verses inside a case. Mezuzah`s are traditionally affixed by Jews on moving in to a new home.

The settlement issue has derailed round after round of peace talks, most recently in April.

Netanyahu also accused Abbas of slander over claims Friday that Israel had waged a "war of genocide" in its 50-day summer military campaign against militants in the Gaza Strip, which killed nearly 2,200 Palestinians.

More than 70 people were killed on the Israeli side.