Journalists attacked in Jerusalem as Israeli nationalists march in Old City
The flag parade is part of Israel's Jerusalem Day, marking its capture of the city's east in the 1967 war.
Marchers threw stones, sticks and bottles at Palestinian and foreign journalists at the Damascus Gate entrance.
They also cheered and chanted racist slogans, including "Death to Arabs".
Far-right Israeli cabinet ministers have joined the procession. One of them, National Security Minister Itamar Ben-Gvir, declared: "Jerusalem is ours foever."
Palestinians along the route in occupied East Jerusalem earlier shuttered homes and shops over fears of abuse.
The march has increasingly become a show of force for Jewish ultranationalists, while for Palestinians, it is seen as a blatant provocation undermining their ties to the city.. The event has in the past sparked much wider violence.
Israeli police have vowed to stop law-breaking, but blamed regional "terrorist elements" for "wild incitement" about the march on social media. They also said it was only "a small minority on both sides [who] try to agitate".
Palestinian Authority leaders called the East Jerusalem events a "provocative act", saying far-right cabinet ministers Mr Ben-Gvir and Bezalel Smotrich - staunch supporters of the parade - were "planting seeds of conflict".
Israeli Prime Minister Benjamin Netanyahu has said the event would go ahead as planned and police said it would take place along its traditional route.
Along the route in the Old City, Samir Abu Sbeih pulled down the shutters of his sweet shop, saying that police had advised Palestinian businesses to do so by mid-afternoon.
"It's not their land to celebrate," he said of the march. "We live under occupation and that's why we have to accept it."
Kebab restaurant owner Basti, who did not want to give his full name, said the event had become "worse" over the years.
"People, when they dance with the flag, sometimes they try to put the flag in your face, sometimes they spit on your face. And this is not nice."
He said police told him he was not being forced to close, but that if he kept his business open, it would be at his own risk.
"For me, I just want to be inside. I don't like problems, for both sides," he said.
Jerusalem Day events have been marked by Israelis for decades, but in recent years, parts of the route have been the focus of spiralling tensions.
In the late afternoon, tens of thousands of Israelis head from the west of Jerusalem to the Old City, ending with a so-called flag dance at the Western Wall, the holiest site for Jewish prayer.
Before that, marchers go their separate ways and thousands of mainly men and teenage boys head into East Jerusalem.
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