Israeli fire brigade said balloons from Gaza caused some 20 blazes in open fields in communities near the frontier.
Israel has launched air strikes on besieged Gaza, the first Israeli strike in the Palestinian enclave since a ceasefire ended 11 days of war last month.
With music blaring, hundreds of Jewish nationalists gathered and moved in front of Damascus Gate.
Some revelers chanted of "Death to Arabs" before others quieted them.
In a scathing condemnation on Twitter, Foreign Minister Yair Lapid said those shouting racist slogans were "a disgrace to the Israeli people", adding: "The fact that there are radicals for whom the Israeli flag represents hatred and racism is abominable and unforgivable".
Tuesday's crowd, while boisterous, appeared to be much smaller than during last month's parade.
Youths wave Israeli flags during a parade marking Jerusalem Day amid Israeli-Palestinian tension as they march along the walls surrounding Jerusalem's Old City, May 10, 2021.
The activists previously reached an agreement with the police that the march will start from Ha-Nevi'im street (Street of the Prophets) and then head to the Damascus Gate, where participants will dance with Israeli flags.
Medics said 33 Palestinians were wounded and police said two officers were injured and 17 people arrested.
The new Israeli premier is himself a Jewish nationalist but the coalition he leads also includes centrist and left-wing parties and, for the first time in the country's history, an Arab party. "I call on all sides not to be dragged into an escalation and maintain maximum restraint", he said.
The rescheduled event was initially planned for last Thursday, but was postponed to this Tuesday when police refused to authorize its planned route through the Old City's Damascus Gate entrance and Muslim Quarter.
Damascus Gate is a focal point of Palestinian life in east Jerusalem. Tensions at the time were further fuelled by protests over the threatened eviction of dozens of Palestinian families by Jewish settlers, also in Jerusalem.
According to Palestinian sources, Israel's air force targeted at least one site east of Khan Yunis in the south of the Gaza Strip, which is home to some two million people.
Israel's annexation of east Jerusalem since the Six-Day War of 1967 is not recognised by most of the worldwide community which says the city's final status should be a matter of negotiation between the two sides.
Israel's annexation of east Jerusalem is not recognized by most of the worldwide community which says the city's final status should negotiated with the Palestinians - who claim the city's east as the capital of their future state. The competing claims to the holy city by Palestinians and Israelis lie at the heart of the conflict and have sparked many rounds of violence.
Hamas had called on Palestinians to show "valiant resistance" to the march.
The iconic Al-Aqsa Mosque compound in the Old City is Islam's third holiest site and a national symbol for all Palestinians.
The so-called balloon unit, Ibna al-Zuwari, announced Monday that it would resume launching balloon-borne incendiary and explosive devices into southern Israel from Tuesday morning.
Authorities last week had delayed the march over security threat in the route as former prime minister Benjamin Netanyahu reportedly put off the march by a week.
UK, Australia agree post-Brexit free trade deal
And, the FTA also means that Brits under the age of 35 will be able to travel and work in Australia more freely and vice versa. The country is home to eight of the 10 biggest farms in the world - including one which is larger than Israel.