A Muslim called for American and Danish people to be murdered, at a protest against cartoons depicting the prophet Muhammad
Umran Javed, 27, of Washwood Heath Road, Birmingham, took part in the event on 3 February last year after the cartoons were published in Denmark.
Prosecutor David Perry QC told the Old Bailey Mr Javed "encouraged killing and incited racial hatred".
Mr Javed denies charges of soliciting murder and stirring up racial hatred.
The cartoons were reproduced in some European countries after their original publication in Denmark.
Mr Javed was recorded on video by the police and arrested later.
The defendant has been accused of using a loud hailer to address around 40 people outside the Danish embassy in Sloane Street, Knightsbridge.
He is then said to have continued with his speech as the crowd were joined by between 200 and 300 other Muslims who had marched from the central mosque in Regent's Park.
Mr Perry told the Old Bailey the defendant "appeared to be one of the leaders".
The prosecutor said Mr Javed condemned the cartoons as dishonouring Muhammad and accused "non-believers of declaring war against Islam and the Muslim community".
"He said disbelievers would pay a heavy price...and said Denmark would pay with blood," said Mr Perry.
Mr Javed allegedly told his audience to take lessons from the murder of a Dutch film director, who was murdered and the slaughter of Jews.
The defendant allegedly said: "Bomb, bomb Denmark. Bomb, bomb USA."
And Mr Perry claimed the crowd responded to these calls with similar calls and chants.
In a reference to the dead Iraqi al-Qaeda leader Abu Mussab al-Zakawi, Mr Javed is said to have told the crowd that Denmark should watch its back, because he was "coming back".
The QC said the words used were plainly criminal and had nothing to do with freedom of speech.
He told the court: "The words used were straight-forward and plain. If you shout out 'bomb, bomb Denmark; bomb, bomb USA', there is no doubt about what you intend your audience to understand.
"The prosecution case is that the defendant was clearly encouraging people to commit murder - terrorist killing."
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