"It makes peace possible because recognising reality is the substance of peace, the foundation of peace," Netanyahu told reporters as he was greeting by EU foreign policy chief Federica Mogherini before a meeting of EU foreign ministers in Brussels.
"There is now an effort an effort to bring forward a new peace proposal by the American administration. I think we should give peace a chance. I think we should see what is presented and see if we can advance this peace."
Netanyahu said Trump's move, condemned by the Palestinians and by European governments, should be emulated by them.
"It's time that the Palestinians recognise the Jewish state and also recognise the fact that it has a capital. It's called Jerusalem," he said.
"I believe that, even though we don't have an agreement yet, this is what will happen in the future. I believe that all, or most, of the European countries will move their embassies to Jerusalem, recognise Jerusalem as Israel's capital and engage robustly with us for security, prosperity and peace."
Mogherini, welcoming Netanyahu on the first visit to the EU by an Israeli premier in 22 years, that the bloc would continue to recognise the "international consensus" on Jerusalem.
She repeated the Union's commitment to a two-state solution and that it was in Israel's interest to find a sustainable solution to its conflict with the Palestinians. The EU, she said, would step up its peace efforts and would hold talks with Palestinian President Mahmoud Abbas next month.
A demonstration condemning Netanyahu's visit is planned for later in the morning in Brussels.
The Israeli leader stressed his country's partnership with Europe, saying its intelligence cooperation had helped prevent militant attacks while its security role in the Middle East had curbed Islamic State's expansion in the region.
He also highlighted Israel's economic contribution in new technologies. Mogherini said the EU and Israel were "friends and partners".
(Reporting by Alastair Macdonald and Robin Emmott; editing by Philip Blenkinsop)
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)