dampened by weeks of internal Palestinian violence and Israeli travel restrictions.

To get to town, Michel Sabbah, the Roman Catholic Church’s highest official in the Holy Land, reportedly rode in his motorcade through a huge steel gate in the Israeli separation barrier that separates Jerusalem from Bethlehem.

Israel claims the barrier prevents Palestinian suicide bombers from reaching Israeli population centers. Palestinians view the structure, which dips into parts of the West Bank, as a land grab.

Marching bands, children dressed as Santa Claus and clergymen in magenta skullcaps gathered reportedly tried to do their best to dispel the gloom hovering over Jesus’ traditional birthplace.

RESIDENTS SAD

But residents remained somber, following weeks of violence in the Palestinian territories between rival factions Fatah, which is loyal to President Mahmoud Abbas, and Hamas, a militant group that won a parliamentary election in January.

"It is a mixture of joy today because of the occasion of Christmas and a touch of sadness because of the (Israeli) siege, the political situation and the deteriorating economy," Bethlehem Governor Salah al-Ta’mari told Reuters news agency.

"All these issues hang in the air along with the Christmas decorations," he added.

TOURISM DOWN

Tourism, the lifeblood of Bethlehem’s economy, has dropped since a Palestinian uprising began in 2000. The average number of visitors per month has fallen to as low as 20,000 people per month from about 100,000 before the uprising.

But Palestinian Tourism Minister Judeh George Morkus said 8,000 to 10,000 visitors were expected over the holiday period, up from 2,000 last year.

"I was scared to come, but I am glad I am here," said Henriette Ausems, 56, a Christian from Holland. "You can feel the holiness here," she told Reuters news agency

FIRST-TIME BOOKINGS

Karim al-Yatim, 54, a concierge at a hotel in Bethlehem said he had bookings for the first time in four months due to the holiday with its Mexican restaurant the hotel’s the main earner for many months.

"Everything has hit us here — the (West Bank) wall, the in-fighting (amongst Palestinians)," he said. "It is very tough here. Every year we say we hope it will be better. Hope is all we have."

In the Vatican, Pope Benedict XVI said he hopes Christmas of Christ helps people to "understand the importance of the life of every human being, from first instance to natural death."

He also urged the faithful to be committed to overcome prejudice, knock down barriers and eliminate divisions to build together a world of justice and peace. (With reports from Bethlehem).

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