* Abu Khudair revenge killing helped stoke Gaza war

* Adult convict lodged insanity plea

An Israeli court jailed two Jewish teenagers on Thursday, one for life and the other for 21 years, over a revenge murder of a Palestinian teenager in Jerusalem that helped trigger the 2014 Gaza war.

The two defendants, whose names were withheld from publication because of their age, and an adult ringleader were found guilty in November of the abduction, bludgeoning, strangling and burning of 16-year-old Mohammed Abu Khudair.

Prosecutors said all of the accused had confessed, calling the July 2, 2014 murder revenge for the killing days earlier of three Israeli youths by Hamas in the occupied West Bank.

The incidents raised tensions, and a seven-week Israeli offensive against the Hamas-run Gaza Strip began on July 8 after cross-border Palestinian rocket attacks and an Israeli roundup of suspected militants in the West Bank.

The defendants sentenced on Thursday were minors, aged 17 and 16, when they killed Abu Khudair. The older of the two teens received the life term.

Tensions are simmering anew, with a wave of Palestinian street attacks against Israelis now in its fifth month, fuelled in part by stalled peace talks and Muslim anger at perceived Jewish encroachment on a contested Jerusalem shrine.

The adult defendant in the Abu Khudair case, Yosef Haim Ben-David, lodged an insanity plea that has held up his formal conviction and sentencing. A court review of Ben-David's psychological competence is scheduled for next week.

Abu Khudair's father, Hussein, told reporters at Jerusalem District Court that the family would appeal to the Supreme Court to give the youngest defendant a life prison term as well.

"If there is no apartheid or racism (in Israel), you will have to do this," Abu Khudair said, accusing authorities of going easy on the defendant because he is a Jew rather an Arab.

The state had sought life prison terms for both underaged defendants, but voiced satisfaction with Thursday's sentencing.

"This is a still a grave punishment," prosecutor Uri Korb told reporters, adding that the minor who received the 21-year term had helped with the abduction and beating of Abu Khudair but had not taken part in finishing off the youth.

"I hope that the message will be relayed that actions of this kind are revolting and that we as a society will not accept them," Korb said.

He added that the state hoped to quash Ben-David's insanity plea, see him sentenced to life behind bars and "bring closure of this in the near future".

Lawyers for the two teenage defendants did not immediately comment on their sentences. Life terms in Israel are often commuted to 25 years' imprisonment, with some inmates offered parole for good behaviour after serving two-thirds of their sentence.