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A dozen pilgrims from India, Canada, Britain, the U.S. and other countries sung impromptu renditions of Christmas carols. David Bogenrief, 57, of Sioux City, Iowa, played the trumpet.

"Jesus was the prince of peace, and he can bring that peace to you. We pray for you," Bogenrief told a gaggle of children who gathered to listen.

In Manger Square, vendors hawked roasted peanuts and Santa hats. Many in the square were Muslims out to enjoy their town's annual moment at the center of world attention.

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"Bethlehem is like the soul of the universe, and it's like an explosion of love here," said Stefano Croce, 46, a fashion photographer from Rome, Italy.

Bethlehem has suffered from the Israeli-Palestinian fighting of recent years, and is now surrounded on three sides by concrete slabs and fences — part of a barrier Israel has built against Palestinian suicide attackers, some of whom came from Bethlehem. The Palestinians see the barrier as a land grab and say it has strangled the town's economy.

Emigration has cut the town's Christian population to an estimated 35 to 50 percent of its 40,000 people, compared with 90 percent in the 1950s.

Image: Palestinian clergymen in West Bank town of Bethlehem
Musa Al-shaer / AFP - Getty Images
Palestinian clergymen stand outside the Church of the Nativity in the West Bank town of Bethlehem during the traditional Christmas procession on Wednesday.

Israel has held peace talks over the past year with the moderate West Bank government of President Mahmoud Abbas, and the spirit of cooperation has allowed Palestinian forces a limited measure of independence in places like Bethlehem, under Israel's overall security control.

Eyad Sirhan, the Israeli military officer responsible for coordination in Bethlehem, said this week that he can talk to his Palestinian counterpart any time, "24 hours a day," about everything from police patrols to garbage collection. Every detail of the holiday preparations was meticulously discussed by the sides, Sirhan said.

Safer times mean the Palestinians have counted more than 1 million visitors to Bethlehem so far this year, a rise of more than 20,000 from 2007.

Gaza violence
The situation is dramatically different in Gaza, controlled by the Islamic militant group Hamas which seized the territory by force in June last year. An Israeli blockade prevents Gazans from leaving the territory and causes shortages of fuel and basic supplies.

The missiles fired from Gaza are inaccurate and Israelis are well drilled in taking cover, so no one was injured Wednesday, though dozens were treated for shock.

One target was Ashkelon, a Mediterranean city of 120,000.

"We demand the government take action," Ashkelon Mayor Benny Vaknin told Israel's Channel 1 TV. "People are hiding in bomb shelters and our children are taking cover under desks at school. This cannot continue."

Foreign Minister Tzipi Livni, running for prime minister in February elections, said in a speech Wednesday: "There is a point where every country and every leadership says — and this is what we say tonight as well — enough is enough."

Security officials said a big military campaign against Gaza militants had already been approved but was being delayed by bad winter weather. They spoke on condition of anonymity because of the sensitivity of Israel's military plans. Meanwhile, the military said, it has decided to hook up an improved warning system against missiles — an indication of mounting concern that Gaza militants have dramatically expanded their range.

To protest Israel's blockade, the head of Gaza's tiny Roman Catholic community — 300 in a population of 1.4 million — canceled Christmas midnight Mass. Father Manuel Musallem said the parish would instead hold an evening mass.

Security concern for Iraqi Christians
In Iraq, the Christmas Eve Mass for Baghdad's small and beleaguered Christian community started before dusk Wednesday instead of at the traditional midnight, a reflection of continued security concerns in the capital.

About 50 people attended the service in the Mar Yusif Chaldean Catholic Church, which started in the late afternoon — the same as the previous five Christmas Eves since the U.S.-led invasion — even though the overall number of attacks in the city has plummeted this year.

The worshipers quietly received communion and many lit candles at a nativity scene at the front of the church.

Christians have often been the target of attacks by Islamic extremists in Iraq, forcing tens of thousands to flee. Many of those who stayed were isolated in neighborhoods protected by barricades and checkpoints.

A coordinated bombing campaign in 2004 targeted churches in the Iraqi capital, and anti-Christian violence also flared in September 2007 after Pope Benedict XVI made comments perceived to be against Islam.

Fewer than 3 percent of Iraq's 26 million people are Christians — the majority of them Chaldean-Assyrians and Armenians, with a small number of Roman Catholics. The exact number of Christians left in Iraq is unclear, but they are thought to number several hundred thousand.

In comments on state-run Al-Sharqiya TV, Chaldean Cardinal Emmanuel III Delly called on all Iraqis "to live together in a quiet, loving, brotherly and equal life" and "not to marginalize the Christians."

The Associated Press and Reuters contributed to this report.


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