BETHLEHEM, West Bank -- Thousands of tourists and pilgrims gathered in Bethlehem for Christmas Eve celebrations yesterday, bringing a long-missing sense of holiday cheer to Jesus' historic birthplace.

The festivities capped the most peaceful year since the outbreak of Israeli-Palestinian fighting in September 2000. But Israel's imposing separation barrier at the entrance to town dampened the Christmas spirit and provided a stark reminder of the unresolved conflict.

The gray concrete wall, which Israel erected to keep attackers out of its cities, divides Bethlehem and blocks access to neighboring Jerusalem. The 25-foot-high slabs drew as much attention yesterday as the Church of the Nativity and the grotto where tradition says Jesus was born.

About 30,000 people were expected to visit Bethlehem over Christmas -- 10,000 more than last year -- but still very different from the 1990s, when 150,000 people would visit during the holiday.

By early evening, 7,000 tourists had arrived, Israeli officials said, despite stinging cold winds and pouring rain. Hundreds more arrived for midnight Mass, though a final crowd estimate was not immediately available.

At the Vatican, Pope Benedict XVI offered a Christmas prayer for peace in the Holy Land and made a special mention of children, including the unborn, as he led his first midnight Mass in the splendor of St. Peter's Basilica.

Pope Benedict's reference to the unborn in his homily was a clear reference to the Roman Catholic Church's opposition to abortion.

"On this night, when we look toward Bethlehem, let us pray in a special way for the birthplace of our Redeemer and for the men and women who live and suffer there," the pope said. "We wish to pray for peace in the Holy Land."

Pope Benedict wore gold-colored robes and blessed the crowd when he arrived, striding up the central aisle of the basilica, which was packed with pilgrims, tourists and Romans.

In Britain, the Archbishop of Canterbury used his annual Christmas sermon to praise two families who showed forgiveness to violent criminals who attacked their loved ones, saying they demonstrate "that miraculous love is possible."

Spirits in Bethlehem were buoyed this year by Israel's summer withdrawal from the Gaza Strip and a sharp drop in violence. Forecasts of a rare white Christmas added to the excitement.

Throughout the day, choirs, marching bands and bagpipe players entertained the crowds. Several thousand people packed Manger Square -- the large, stone-paved courtyard near the Church of the Nativity -- as a procession led by Latin Patriarch Michel Sabbah entered Bethlehem.

At Patriarch Sabbah's midnight Mass, he said the two sides should put "the past on hold to make room for a new future to begin."

Patriarch Sabbah, speaking at St. Catherine's Church, adjacent to the traditional birthplace of Jesus, also called for an end to Israel's killing of Palestinian militants, saying the practice has failed to improve security or halt the cycle of violence.

Security was heavy days after Palestinian gunmen briefly took over City Hall to demand jobs, but there were no reports of trouble.

Restaurant, shop and hotel owners happily counted their money as visitors packed their establishments for the first time in years.

Palestinian leader Mahmoud Abbas arrived in town late yesterday to join the celebrations and attend midnight Mass.

In a televised speech, Mr. Abbas said the Palestinians "are seeking a bridge to peace instead of Israeli walls."

The separation barrier prevented tourists from walking into town on the biblical-era route likely used by Jesus and Mary. Instead, they entered through an Israeli checkpoint.