Palestinian leader Yasser Arafat triumphantly emerged from his West Bank headquarters Thursday, just hours after Israeli troops withdrew from the besieged compound and released him from more than a month of confinement.

Greeted by a cheering crowd of hundreds of Palestinians, Arafat flashed V-signs and gave a thumbs up. Aides steadied the 72-year-old Arafat as he walked down a small flight of steps to a waiting motorcade.

Arafat was smiling as the crowd chanted, "With our spirit and our blood, we will redeem you, oh Arafat."

The limousine, accompanied by two cars with security guards hanging out of the windows and their weapons at the ready, sped toward downtown Ramallah, where Arafat visited a hospital. He paused for brief prayers in the hospital parking lot, where several Palestinians killed during Israel's takeover of the town had been buried in makeshift graves.

Israeli forces completed their withdrawal from Ramallah early Thursday, hours after a diplomatic breakthrough that saw six wanted Palestinians sent to jail, where they will be watched over by American and British wardens.

During the U.S.-negotiated pullout, new violence erupted at another trouble spot — the besieged Church of the Nativity in Bethlehem, where about 200 people have been holed up for a month.

A fire broke out at the church compound just as a fierce exchange of gunfire began between Israeli soldiers outside the church and Palestinian gunmen inside. Both the fire and shooting ended after about a half-hour, and it wasn't immediately clear how either began.

Also early Thursday, Israeli tanks and armored vehicles moved into the Palestinian town of Tulkarem, witnesses said. Soldiers declared a curfew. The Israeli military said soldiers arrested five terror suspects and the sweep was continuing. The statement said Israeli forces also entered Tel and Beita villages and the al-Aroub refugee camp.

The agreement to end months of confinement for Arafat produced a dramatic resolution to one of the thorniest confrontations in the Mideast conflict. However, Israelis and Palestinians remain far apart on larger issues, such as a cease-fire, a resumption of peace negotiations and an end to the standoff at the Church of Nativity.

Ramallah city workers started dismantling Israeli roadblocks and clearing rubble from the streets around the compound after the Israelis left. About two hours later, the military said in a statement, "Israeli forces tonight completed their mission in the town of Ramallah and left all parts of the town."

In the parking lot just outside Arafat's office, Palestinian men hugged and kissed each other on the cheeks to celebrate the Israeli withdrawal. Dozens of Palestinian security officers who had been holed up with Arafat chanted and thrust their rifles into the air in unison.

Israeli Prime Minister Ariel Sharon said there was no guarantee Arafat would be able to return if he leaves the country.

"We're not asked to give any guarantees, we're not going to give any guarantees, because usually in the past when he left, it was always a sign for a wave of terror," Sharon said during an interview with ABC Wednesday.

Israel agreed in principle on Sunday to release the Palestinian leader from five months of increasingly stringent confinement — first to the town of Ramallah, then to the compound, then to a few rooms in his office building.

The stalemate ended when the sides accepted President Bush's plan to move six wanted Palestinians from Arafat's offices to a jail in the West Bank town of Jericho, where they will be watched over by American and British wardens. Israel had been demanding custody of the men, who it says killed Israeli Cabinet minister Rehavam Zeevi in October.

A dozen U.S. and British armored vehicles pulled into Arafat's compound around sundown Wednesday, picking up the men as they walked out of Arafat's office building. Led by three Israeli security jeeps, the vehicles traveled in single file as they left the complex, littered with crushed cars and bullet-pocked buildings.

An hour later, Palestinians lining the street in front of the jail clapped and whistled as the six men arrived at the jail in Jericho, about 22 miles away.

At the same time, some Israeli trucks and armored personnel carriers began pulling out of Arafat's compound, part of a planned withdrawal from the entire city that was expected to take up to six hours, according to Israeli military officials.

Some troops shouted and waved as the tanks, armored personnel carriers and trucks drove through the otherwise deserted streets of Ramallah, just north of Jerusalem.

"We now expect to see Arafat translate his words into deed and to actively fight terror emanating from his own society," said Israeli Foreign Ministry spokesman Mark Sofer.

The six wanted men had been holed up with Arafat and about 300 other people since Israeli forces charged into the compound at the beginning of a March 29 invasion in the West Bank, aimed at rooting out Palestinian militants.

In a lightning trial at the compound last week, four were convicted of the killing of Zeevi.

The two others are Ahmed Saadat, leader of the radical PLO faction that carried out the assassination, and Fuad Shobaki, alleged mastermind of a seaborne Palestinian arms shipment intercepted by the Israeli navy in January.

Israel's Defense Minister Binyamin Ben-Eliezer said the success of Israel's military offensive in the West Bank "will be judged by the speed with which we return to diplomatic negotiations."

But prospects for talks remained dim amid the ongoing violence.

Also Wednesday, U.N. Secretary-General Kofi Annan abandoned a U.N. fact-finding mission to the West Bank refugee camp near Jenin because of Israel's refusal to cooperate until the team's mandate was changed.

Palestinian officials said a total of 52 bodies — up four from last week — have been recovered at the camp, the scene of a fierce battle last month between Israeli troops and Palestinian gunmen and the subject of intense international scrutiny.

Palestinians say Israeli troops carried out a massacre of civilians, killing hundreds. But Israel says the death toll is about 50 or slightly higher, and that most of the dead were gunmen killed in combat.

At his Ramallah compound, Arafat appeared to shake with anger as he received word of the fire at the Church of the Nativity.

"How could the world possibly be silent about this atrocious crime," he told Palestinian supporters and journalists who rushed into his offices after the Israelis pulled out of his compound.

"I don't care if this room I'm sitting in blows up. What concerns me is what is happening at the Church of the Nativity. This is a crime that cannot be forgiven."

It wasn't clear what started the fire. Witnesses said Israeli soldiers fired flares that sparked the blaze in the Orthodox and Franciscan sections of the church. But Israeli government spokesman Dore Gold told CNN that the fire was intentionally set by Palestinian fighters holed up inside. Gold said Israel's offers to help extinguish the flames were refused and witnesses said three people were slightly burned trying to put out the fire.

In other violence, four Palestinians — including a 2-year-old girl — were killed Wednesday in the Gaza Strip by Israeli fire.

The shooting came after a roadside bomb went off near an Israeli tank at the Rafah crossing in the southern Gaza Strip, along the Israeli-Egyptian border. Palestinian witnesses said tanks then fired machine guns and shells at a nearby neighborhood, killing the 2-year-old and a deaf man in their homes. Palestinians said tanks then drove into the Rafah refugee camp, prompting an exchange of fire in which two more Palestinians were killed.

The military said soldiers spotted the Palestinians who set off the roadside bomb, fired on them with light arms and hit one of them. A second attacker was captured, the army said.

The Associated Press contributed to this report.