Bangladesh, May 10 -- Israeli police faced off with Palestinian protesters Sunday in another night of clashes in east Jerusalem, a day before Israeli nationalists planned to parade through the Old City in an annual flag-waving display meant to cement Israeli claims to the contested area.

The late-night skirmishes raised the likelihood of further clashes Monday during the annual Jerusalem Day celebrations. Israeli police gave the go-ahead to the parade Sunday, despite days of unrest and soaring Israeli-Palestinian tensions at a flashpoint holy site and in a nearby Arab neighborhood where Jewish settlers are trying to evict dozens of Palestinians from their homes.

Addressing a special Cabinet meeting ahead of Jerusalem Day, Prime Minister...