Israeli policemen shot dead a Palestinian who tried to stab an officer near Jerusalem's walled Old City this morning, a police spokeswoman said, as almost three months of heightened violence shows no sign of abating.

In the past 12 weeks Israeli forces or armed civilians have killed at least 126 Palestinians, 77 of whom authorities described as assailants. Most others have been killed in clashes with security forces.

Palestinians have killed 20 Israelis and a U.S. citizen in the same period, raising fears of a wider escalation, a decade after the last Palestinian uprising subsided.

Police spokeswoman Luba Samri said that on Saturday, officers had approached a man they viewed as suspicious. "The terrorist whipped out a knife and tried to stab a police officer. He was swiftly shot and neutralised," she said.

The surge in violence since October has been fuelled by Palestinians' frustration over Israel's 48-year occupation of land they seek for an independent state and the expansion of settlements in those territories which were captured by Israel in the 1967 Middle East war.

Palestinian leaders say a young generation sees no hope for the future living under Israeli security restrictions and with a stifled economy.

The latest round of U.S.-brokered peace talks collapsed in April 2014.

Violence has also been triggered by Muslim anger over stepped-up Israeli visits to Jerusalem's al Aqsa mosque complex. The site, Islam's holiest outside Saudi Arabia, is also revered by many Jews as a vestige of their biblical temples.

Israeli leaders says Islamist groups who call for the destruction of Israel have played a major role in inciting the recent violence.