Jerusalem: Hundreds of people attended the funeral on Sunday of a Palestinian who was fatally shot by Israeli police in an incident for which Israel's new defense minister later apologised.

A police spokesman had said officers killed a Palestinian they suspected was carrying a weapon in Jerusalem's Old City on Saturday, but according to Israeli media, the man was later found to have been unarmed.

Palestinian officials said the 32-year-old man, Iyad Khayri, suffered mental health issues and they decried his killing.

In comments at Israel's Sunday cabinet meeting, Defence Minister Benny Gantz said: "We are really sorry about the incident in which Iyad Khayri was shot to death and we share in the family's sorrow - but I am certain this matter will be investigated swiftly and conclusions will be drawn."