Thousands of people have gathered to celebrate Christmas at Manger Square in the West Bank city of Bethlehem, the site where Christians believe Jesus Christ was born.
Tourists, pilgrims and clergy converged on Christianity's holiest city as boy scouts marching bands played outside the Church of the Nativity.
Candles were lit inside the church, identified by Christian tradition as the site where Jesus was born in a stable two millennia ago.
Latin Patriarch Fouad Tawal, the archbishop of Jerusalem and the Catholic Church's top clergyman in the Holy Land, later conducted mass at midnight local time.
Palestinian policemen have been deployed around Bethlehem to keep the peace.
Although the number of tourists visiting Bethlehem has risen in recent years, many visitors have been put off by the threat of violence and the fact that Bethlehem is now located just inside the Israeli-built separation wall.
Part of the wall, which Israel says is to stop Palestinian suicide bombers from entering the country, cuts through southern Bethlehem, blocking the road to Jerusalem, which is about 5km away.
Visitors to Bethlehem cross through a massive metal gate in the wall to enter the town.
Victor Batarseh, the mayor of Bethlehem, expressed hope for peace "not only in Bethlehem and Palestine, but all over the world".
Opening Christmas celebrations in Bethlehem last week, Batarseh said the wall was hindering access to the town and having an adverse effect on tourism.
Despite the controversy over the wall, Bethlehem's 2,750 hotel rooms are booked solid for the Christmas week and the town has more hotels under construction.
About 90,000 visitors are expected in the town during the Christmas season, up from about 70,000 last year, according to Israeli government figures.
Al Jazeera's Nour Odeh, reporting from Bethlehem, said the increase in tourist arrivals for Christmas is significant because it is extremely difficult for visitors to get inside.
"Bethlehem is surrounded by 22 Israeli checkpoints or dirt mounds that have split up the communities, and the districts are surrounded by 17 separate illegal Israeli settlement or outposts.
"Israel requires all pilgrims to enter and exit Bethlehem from a single checkpoint, causing massive traffic jam and delays, and the Israeli control over the tourism industry limits the number of pilgrims who stay over."
Our correspondent said most of the tourists are visitors, spending time in the city but not sleeping over.
"They come to Bethlehem, look at it, enter the church and pray, and then leave without staying over. They don't contribute to the local economy and they don't interact with the local community."
|Christmas celebrations go on in Bethlehem despite being hampered by the Israeli separation wall [EPA]
Speaking to Al Jazeera in Bethlehem, Munib Younan, the president of the Lutheran World Federation, which represents about 70 million Christians, said he was happy more tourists and pilgrims are visiting the birthplace of Jesus.
"Today we are also happy to see both Muslims and Christians celebrating Christmas together in Bethlehem," he said, noting that Christmas was a holiday in both Palestine and Jordan.
Younan, who is also the bishop of the Evangelical Lutheran Church in Jordan and the Holy Land, said a survey by Palestinian Christians in 2009 showed three reasons why they are emigrating from this part of the world.
"There is no persecution whatsoever. The reasons are mainly an uncertain political situation with no hope for peace and justice given the state of the occupation, the lack of jobs and the growth of extremism both in Palestine and in Israel," he said.
"All these create fear among Palestinian Christians, driving them out of the area. This year our message to them is not to be afraid and to stay in the country.
"Only by living here will they understand why God created them to be in the Holy Land … and that will give them steadfastness to remain here."