JERUSALEM, DEC. 19 -- Palestinian protesters smashed the plate glass fronts of three Israeli-owned banks, stoned police and blocked traffic in the predominantly Arab eastern sector of Jerusalem with roadblocks and burning tires today during the worst rioting here in at least a decade.

The demonstrations, involving hundreds of protesters and lasting for about four hours, appeared to catch city officials off guard despite the fact that unrest has rocked the Israeli-occupied West Bank and Gaza Strip for the past 11 days. Protests continued in several locations in the occupied territories today, although casualties were apparently the lightest since the trouble began on Dec. 9. At least 17 Palestinians have died from Israeli Army gunfire since then.

Jerusalem Mayor Teddy Kollek said a tiny minority of the city's 130,000 Arab residents had organized the violence here in hopes of disrupting tourism, which is normally heavy during the Christmas season. Three policemen were reported slightly injured in the clashes and 33 protesters were arrested.

"It's a severe blow, but we don't have to exaggerate," the mayor told reporters. "No one was {seriously} hurt and no one was killed."

Kollek said that the controversial move last week of right-wing minister Ariel Sharon into a rented apartment in the Moslem Quarter of Jerusalem's walled Old City also had inflamed Palestinians.

Given the violence in the occupied territories, he added, "any event could light a fire. And the Sharon event is more than a match." Kollek opposed Sharon's move and boycotted a housewarming Hanukah party the former defense minister threw for about 100 friends and notables.

Israel captured East Jerusalem, including the walled Old City, from Jordan in the 1967 Middle East war, which is also when it occupied the West Bank and Gaza. The government quickly annexed the eastern part of the city and declared Jerusalem to be Israel's united and eternal capital. The Israeli claim is not recognized by most countries, including the United States, which hold that Jerusalem's status must be determined in Middle East peace talks.

Today's demonstrations started at about 8 a.m. in A-Tur, an Arab village on the Mount of Olives at the eastern edge of the city, and quickly spread to East Jerusalem's main shopping section, where police fired scores of tear gas canisters to disperse stone-throwing crowds of mostly young Palestinians.

On the West Bank, disturbances were reported in Nablus, Jenin, Hebron and Bethlehem. The Army imposed curfews on three Palestinian refugee camps and used tear gas to disperse demonstrators. The Palestine Press Service said two Arabs were wounded by Army gunfire near Bethlehem. The claim could not immediately be corroborated.