The current conflict centers around new security measures Israeli police set up around what's known as the Temple Mount to Jews and the Noble Sanctuary to Muslims.
The Palestinian Maan news agency and Israeli Haaretz newspaper reported that an 18-year-old Palestinian was killed in the Ras al-Amud neighbourhood during rallies prompted by Israel imposing a ban on men under 50 entering Jerusalem's Old City.
"We announce a freeze on all contacts with Israelis on all levels", Abbas said Friday, according to The Times of Israel, "until it cancel the steps taken against our people in Al-Aqsa and in Jerusalem".
Incensed at what they perceive as a violation of delicate decades-old access arrangements at Islam's third-holiest site, many Palestinians have refused to go through the metal detectors, holding street prayers and often violent protests.
Israeli officials say three Israelis have died and one more is wounded after a Palestinian broke into a home in a West Bank settlement and stabbed the inhabitants. Israeli media said the three dead were all members of the same family, two men aged 60 and 40 and a woman of 40.
One security session was expected to discuss the recent implementation of metal detectors at entrances to a key holy site in the Old City.More news: Maryam Mirzakhani, first woman to win Nobel for Mathematics, dies at 40
Abbas specified the recently installed walk-through metal detectors installed at the Temple Mount as being the main cause, saying it was "falsely presented as a security measure to take control over Al-Aqsa mosque".
"I call on all concerned parties to de-escalate the situation and on moderate voices to speak up against those who try to fuel tensions", said Nickolay Mladenov, the UN Special Coordinator for the Middle East Peace Process, in a statement on Thursday.
Israel's army confirmed it was involved in clashes in Abu Dis.
The decision to install the metal detectors at the entry point to the shrine in Jerusalem's walled Old City on Sunday was made after the killing of two Israeli policemen on July 14. Aware of the potentially explosive religious and political sensitivities, Israel allowed the Waqf to remain in charge of day-to-day affairs inside the mosque compound under the aegis of Jordan. "This is our place of prayer, we have sovereignty here", Salaam said.
Muslim leaders believe that the metal detectors are part of an Israeli attempt to expand control over the site.
Osama Saadi, of the Joint (Arab) List, said in a Channel 2 interview that Prime Minister Benjamin Netanyahu was "playing with fire" by maintaining the upgraded security measures that were introduced after last week's attack, in which three Arab-Israelis shot dead two Israeli police officers using guns they had smuggled into the holy site.