A Jerusalem court ordered Sunday that a Palestinian American teenager, who was allegedly beaten in police custody, be released to house arrest for nine days pending an investigation into stone-throwing allegations.

Tariq Abu Khder, 15, who holds US citizenship and lives in Florida, is a cousin of Mohammed Abu Khder, a 16-year-old Palestinian whose kidnap and murder by suspected Jewish extremists on Wednesday sparked four straight days of riots.

"He was given nine days house arrest in Beit Hanina for the duration of the investigation," police spokeswoman Luba Samri said, following a hearing at Jerusalem Magistrates Court, referring to a neighbourhood of annexed Arab east Jerusalem.

Tariq, 15, was arrested on Thursday in the east Jerusalem neighbourhood of Shuafat during clashes between stone-throwers and Israeli riot police which erupted early on Wednesday.

According to his parents, he was beaten in police custody, provoking a sharp rebuke from the US State Department, which said it was "profoundly troubled" by the report.

He was holidaying in Jerusalem when his cousin was murdered in what was widely believed to be a revenge attack following the abduction and murder of three Israeli teenagers in the occupied West Bank last month.

Until now, Israel police have said the motive for the cousin's murder was unclear, but on Sunday, Samri said there were "indications that apparently the background to the killing was nationalistic". All other details are under a gag order.

Preliminary post-mortem results suggested the teenager had been burned alive.

A day after Abu Khder's arrest, a video surfaced on YouTube showing what appeared to be Israeli border police beating and kicking a handcuffed semi-conscious figure lying on the ground, before dragging him away.

Police confirmed the footage was taken during the arrest of six Palestinians in Shuafat, but could not say whether the figure was that of the teenager, whose mother showed AFP a picture of him with his face grossly distorted by injuries and swelling.

"We are profoundly troubled by reports that he was severely beaten while in police custody and strongly condemn any excessive use of force," State Department spokeswoman Jen Psaki said.

"We are calling for a speedy, transparent and credible investigation and full accountability for any excessive use of force."

The justice ministry's police investigations department began an investigation into the violence on Saturday evening following an order by Justice Minister Tzipi Livni who demanded the incident be "urgently" looked into, a statement said.

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