Jerusalem (AFP) - A Jerusalem court found two Israelis guilty Monday of the burning alive of a Palestinian teen in the run-up to last year's Gaza war, but held off on convicting the alleged ringleader, raising the risk of fresh tensions.

The ruling comes amid two months of Palestinian attacks and the court's decision to delay the main suspect's conviction to evaluate his mental state drew criticism from the victim's family and Islamist movement Hamas.

In Monday's ruling, two Jewish Israelis who were minors when they were charged were convicted by the court of the July 2, 2014 abduction and murder of Mohammed Abu Khdeir, 16.

The third defendant, a 31-year-old Israeli settler viewed as the ringleader, was found to have committed the crime, but the court held off on convicting him after his lawyers submitted a report in recent days arguing his mental state meant he was not responsible for his actions.

Abu Khdeir's father denounced the delay in the verdict and called for the trio's houses to be demolished, as Israel does for Palestinian attackers.

"The court behaves one way with Arabs and another way with Jews," Hussein Abu Khdeir told reporters outside the court, calling the last-minute psychiatric report by Yosef Haim Ben-David's lawyers a "trick" and asking why it was not submitted earlier.

Sentencing for the two who were convicted was set for January 13, while a hearing was scheduled for December 20 for Ben-David, from the Adam settlement in the occupied West Bank.

Abu Khdeir was abducted and killed weeks after the kidnap and murder of three Israeli teenagers in the West Bank.

The incidents were part of a spiral of violence that led to a 50-day war in the Gaza Strip between Israel and Palestinian militants.

The war killed more than 2,200 people, making 2014 the bloodiest year of the Israeli-Palestinian conflict, according to the United Nations.

- Hamas denounces decision -

The two convicted are 18 now but were 16 when they were charged in July 2014, with one from Jerusalem and the other from the Israeli town of Beit Shemesh. They have not been identified by the court.

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Abu Khdeir was kidnapped from Israeli-annexed east Jerusalem and beaten, with his burned body found hours later in a forest in the western part of the city.

An initial forensic report showed smoke in his lungs, indicating he was alive when set alight. A lawyer for the family told AFP his body had been burnt beyond recognition.

Israeli authorities said the suspects had decided to kill an Arab in revenge and equipped themselves with cable ties, petrol and other materials before randomly choosing Abu Khdeir.

They had allegedly tried to kidnap a child in east Jerusalem the day before, but were thwarted by the youth's mother.

Weeks earlier, the June 2014 abduction of Naftali Frenkel, Gilad Shaer and Eyal Yifrach from a hitchhiking stop near the flashpoint West Bank city of Hebron sparked a vast Israeli search operation in which hundreds of Palestinians were arrested and at least five killed.

Israel immediately blamed the kidnappings on militants from Hamas, the Islamist movement that controls Gaza, rounding up hundreds of suspected members in the West Bank.

The brutal revenge killing of Abu Khdeir was followed by an uptick in rocket fire from Gaza, and the launch on July 8 of a full-scale Israeli military operation against the Palestinian enclave.

Hamas denounced the delay in the verdict for Ben-David, calling it "proof of the occupier's racism and the cover it gives to settlers' crimes."

The head of a coalition of Arab Israeli political parties also criticised the court's decision, saying "when the murderers are Jewish, they benefit from the protection of judicial institutions."

"Sometimes it is prohibited to reveal their names and other times they suffer from psychological troubles," Ayman Odeh, a member of the Israeli parliament, said in a statement.

Abu Khdeir's name was initially included on an Israeli memorial to victims of "terror attacks," but it was removed after his family objected, with his father saying he was Palestinian, not Israeli.

A fresh wave of violence erupted in Israel, the West Bank and the Gaza Strip at the start of October, including knife, gun and car-ramming attacks as well as protests by Palestinians.

Violence since October 1 has left 101 dead on the Palestinian side, including an Arab Israeli, as well as 17 Israelis, an American and an Eritrean.

Many of the Palestinians killed have been alleged attackers, while others have been shot dead by Israeli security forces during clashes.