Trump's recognition of contested Jerusalem as Israel's capital in December outraged Palestinians, who said the United States could no longer serve as an honest broker in any peace process with Israel.
Palestinians erupted in fury as the United States opened a new embassy in Jerusalem.
"We urge calm and restraint to avoid actions destructive to peace efforts", a Number 10 spokesman said.
Israeli gunfire killed at least 52 Palestinians, the highest toll in a single day since a series of protests demanding the right to return to ancestral homes in Israel began on March 30. "A day that will be engraved in our national memory for generations", Mr Netanyahu said in a speech at the ceremony.
"Jerusalem is a Palestinian territory, and according to global law, Jerusalem should be under worldwide law until both parties agree to divide it into (two) capitals or what", said Jamal Hamed, president of the Association of Palestinian Arab Canadians. "And the Trump administration is validating that in a way no other administration has".
Commenting on the issue, the majority of regional states and a number of Western countries said that the USA move contradicted worldwide resolutions and did not fall within the framework of previous Israeli-Palestinian agreements. The demonstrations have been encouraged by Hamas, the militant group that has controlled the Gaza Strip since 2007.
Hamas denied instigating the violence.
Trump's decision to move the embassy broke the American policy of refraining from establishing embassies in contested cities until a peace deal has been reached.
A senior Hamas leader, Khalil Al-Hayya, said at a border encampment that Monday's protest was timed to coincide with the "deplorable crime of moving the U.S. Embassy to Jerusalem".
Several US officials have told CNN that US embassies throughout the Middle East and Muslim countries are on alert because of three key events: the US embassy opening in Jerusalem on Monday, the beginning of Ramadan and the Nakba anniversary for Palestinians.
The Trump administration has said the embassy move does not aim to prejudge Jerusalem's final borders.
Dan Shapiro, a former US ambassador to Israel, said Washington is not responsible for the fact that Iran acts as "the major source of tension and instability in the region".
With the United States moving the embassy Monday from Tel Aviv to Jerusalem, a city that the global community has considered neutral due to competing ownership claims by the two sides, the protests bubbled up.
The U.N.'s dislike for Israel is obvious. "What is the likelihood of that?". They also count on the United States for their security.
She said Jerusalem was an internationally recognised disputed territory and a "fair division" was the only hope of peace. But not Trump. "When President Trump makes a promise, he keeps it".
"The peace plan will be brought forward at the appropriate time". The White House is defending the IDF response to the "unprecedented" threat.
But it had drawn widespread skepticism even before the latest developments.
Indyk said the decision "hasn't advanced peace at all". "They've driven the Palestinians away from the table and given them the excuse not to come back".