Palestinian president Mahmud Abbas in a statement demanded that Israeli Prime Minister Benjamin condemn the murder and that Israel "take concrete steps on the ground to stop (revenge) attacks and the chaos caused by the Israeli escalation".
Presidential spokesperson Nabil Abu Rudeina in a separate statement heaped blame on the Israeli authorities.
"Israel is fully responsible for the killing of the teenager and we demand that the perpetrators are found and held accountable," he said
Shortly after the Palestinian comments, Netanyahu issued a statement condemning the "despicable murder" and urging the authorities to expedite investigations.
Israeli Public Security Minister Yitzhak Aharonovitch confirmed there was a link between the missing youth and the body found in a forest in west Jerusalem, the Walla news website reported.
In a conversation with Aharonovitch, Netanyahu asked that the investigating authorities "work as quickly as possible to find out who was being the heinous murder of the youth and what is the background to the incident."
Netanyahu also "called on all sides not to take the law into their own hands" as fears grew that the killing was an act of revenge for the murder by Palestinian militants of three Israeli teenagers, whose bodies were found on Monday.
The killing sparked a wave of clashes in east Jerusalem where around 200 angry young Palestinians threw stones at police, who responded with sound bombs and rubber bullets, an AFP correspondent and police said.
Quoting witnesses, the radio said the youth was seen being forced into a car in the Arab eastern half of the city.
A body was found shortly afterwards in another part of the city, the radio said, describing it as a "suspected revenge attack" for the kidnapping of three Israeli teenagers from the southern West Bank on June 12.
Israel has blamed Hamas for their murders in an incident which has shocked the nation and triggered calls for revenge.
Several hours after they were buried on Tuesday, around 200 Israelis rampaged through Jerusalem, stopping cars and the light rail and shouting "Death to Arabs," police and witnesses said. Police said 47 people were arrested.
Police spokesperson Luba Samri confirmed they were investigating reports of a kidnapping and said they had found a body but refused to say whether the two incidents were connected. She did not give details on the victim's identity.
"In the early hours of Wednesday morning, police received a report of a person being forced into a car in Beit Hanina," Samri told AFP, referring to a well-heeled east Jerusalem neighbourhood.
"Within an hour, a body was found in Jerusalem that has still not been identified. We are looking to see if there is a connection between the two incidents."
Quoting witnesses, army radio said a black car had stopped next to a youth who was hitchhiking and he was forced inside. The car then took off.
Some time later, the family of the youth, who is understood to be around 16, reported him missing, it said.
The body was discovered in a forest in Givat Shaul in southwest Jerusalem. An AFP correspondent said police had sealed off a large area around the neighbourhood.
United States condemns the killing:
The United States on Wednesday condemned the killing of a Palestinian youth in apparent revenge for the murders of three Israeli teenagers, warning acts of vengeance would worsen an explosive situation.
"There are no words to convey adequately our condolences to the Palestinian people," Secretary of State John Kerry said in a statement.
Kerry condemned the killing in "the strongest possible terms."
He said it was sickening to think a young boy could be "snatched off the streets and his life stolen from him and his family."
Kerry noted that Prime Minister Benjamin Netanyahu had condemned the killing and urged Israelis not to take the law into their own hands. "Those who undertake acts of vengeance only destabilise an already explosive and emotional situation," Kerry said. "We look to both the Government of Israel and the Palestinian Authority to take all necessary steps to prevent acts of violence and bring their perpetrators to justice. "At this tense and dangerous moment, all parties must do everything in their power to protect the innocent and act with reasonableness and restraint, not recrimination and retribution."
President Barack Obama's national security advisor Susan Rice said on Twitter that the murder of 16-year-old Mohammed Abu Khder was "heinous" and called on both Israelis and Palestinians to avoid a cycle of retribution and revenge.
US strongly condemns the heinous murder of Muhammad Hussein Abu Khdeir in Jerusalem 1/3
— Susan Rice -Archived (@AmbRice44) July 2, 2014
US sends condolences to his family and Palestinian people 2/3
— Susan Rice -Archived (@AmbRice44) July 2, 2014
Perpetrators must be brought to justice. US paying close attention to investigation. 3/3
— Susan Rice -Archived (@AmbRice44) July 2, 2014
British PM condemns the killing:
British Prime Minister David Cameron condemned as "appalling" Wednesday the killing of a Palestinian teenager in an apparent revenge attack after three Israeli youths were murdered.
I'm appalled by the murder of a Palestinian teenager," Cameron wrote on Twitter. "The loss of four boys this week is a terrible reminder of the need for lasting peace."
I'm appalled by the murder of a Palestinian teenager. The loss of four boys this week is a terrible reminder of the need for lasting peace.
— David Cameron (@David_Cameron) July 2, 2014
United Nations condemns the killing:
The United Nations Special Coordinator for the Middle East Peace Process strongly condemned the murder of a Palestinian boy in Jerusalem.
He called on both Israelis and Palestinians to refrain from aggravating an already strained situation.
“There can be no justification for the deliberate killing of civilians – any civilians,” UN envoy Robert Serry said in a statement issued in Jerusalem. “The perpetrators of such heinous acts must be brought to justice.”
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