TEL AVIV: The United Arab Emirates opened an embassy in Israel Wednesday, housed in Tel Aviv's new stock exchange building, in the latest normalisation move under a deal brokered by Washington last year.

The venue in the heart of Israel's financial district highlighted the central role of economic cooperation in their ties since the UAE became only the third Arab country to recognise the Jewish state.

At the ceremony, attended by new Israeli President Isaac Herzog, Emirati ambassador Mohamed al-Khaja called the embassy opening "an important milestone in the growing relationship between our two countries".

"The UAE and Israel are both innovative nations, we can harness this creativity to work towards a more prosperous and sustainable future for our countries and our region," he said.

Herzog called for the "historic agreement" with the UAE to be "extended to other nations seeking peace with Israel."

Israel and the UAE have signed a raft of deals ranging from tourism to aviation to financial services since normalising ties in a deal brokered by former US president Donald Trump's administration and announced last August.

Wednesday's ceremony, held in the lobby of the stock exchange building two floors below the embassy, came after Israeli Foreign Minister Yair Lapid made a landmark visit to the UAE last month, opening an embassy in Abu Dhabi and a consulate in Dubai.

The Palestinians were outraged by the UAE's decision to establish ties with Israel, which broke with decades of Arab consensus that there should be no such normalisation without a comprehensive peace between Israel and the Palestinians. Israel led by then-prime minister Benjamin Netanyahu normalised relations with Bahrain, Morocco and Sudan