Palestinian Christians celebrated Christmas Day mostly alone in Bethlehem on Wednesday, as two years of violence kept foreign pilgrims away.

Latin Patriarch Michel Sabbah, the highest-ranking Roman Catholic clergyman in the Holy Land, told a small number of worshippers attending morning Mass at the Church of the Nativity not to lose hope, despite the bloodshed and hardships.

"Despite the difficult circumstances, we still have to maintain hope with the love of God and say hopefully that next year will be a better Christmas," he said. "All of our difficult times will be followed by good days if we face our enemies with love."

The Mass was one of the highlights of an otherwise dreary Christmas in the town where Christians believe Jesus was born. It was the first Christmas since 1994 that the town was under Israeli control.

Protesting the Israeli reoccupation, which followed a deadly suicide bombing in Jerusalem carried out by a Palestinian from Bethlehem, town leaders canceled Christmas festivities, leaving only the religious ceremonies intact.

Boutrus Akleh, 32, of Bethlehem said his three children received almost no Christmas gifts this year because he could not afford to buy them. The Palestinian economy has been hobbled since fighting began 26 months ago, with thousands of people thrown out of work and companies forced to shut down.

"We insist on praying to Jesus to help us end this difficult time and decrease our people's suffering," Akleh said. "We are wishing that the Lord Jesus will help us end this tragedy and bring peace and stability to Bethlehem."

Israeli soldiers on Christmas Eve pulled back from Manger Square in front of the Church of the Nativity, which marks the traditional birthplace of Jesus. They redeployed at checkpoints outside the town, and soldiers examined each vehicle that entered.

For the second year in a row, Israel banned Palestinian leader Yasser Arafat from attending Christmas ceremonies in Bethlehem, charging that he has done nothing to stop Palestinian attacks against Israel.

During the midnight Mass at St. Catherine's Church, next to the Church of the Nativity, an empty chair draped with an Arabic keffiyeh headscarf symbolized the absent leader.

Arafat, a Muslim, had participated regularly since 1995, the year Israel handed Bethlehem and most other West Bank towns to the newly created Palestinian Authority under interim peace accords. He has been confined to his headquarters in the West Bank town of Ramallah for a year, facing an Israeli threat not to let him return if he leaves.

After church bells rang out for the first time in an otherwise forlorn Bethlehem, Sabbah, the senior Roman Catholic clergyman in the Holy Land, prayed for Arafat's welfare, though in media interviews he repeated a call for Arafat and Israeli leaders to step down because they could not make peace.

At the beginning of his sermon, Sabbah said, "We ask God to give you vision and strength in the siege that you face to remain steadfast in justice and peace."

Sabbah said Israel is the side that must take steps to end the Mideast conflict.

He called on Israelis to "find leaders with a vision of peace or help your leadership to find new heads capable of bringing peace. They will bring for you the security you need and for the Palestinians the rights and freedoms and security Ûthey needÝ."

Christmas Eve celebrations in Bethlehem have been subdued for the last two years because of Palestinian-Israeli violence, but this year, the mood sank to a new low.

No Christmas decorations adorned Manger Square in front of the church. The tall fir tree next to the complex, usually draped with strings of colorful lights and ornaments, stood bare. The platform built each year for choirs to serenade the holiday-makers in Manger Square was absent. The violence has frightened away tourists, crippling Bethlehem's economy.

On Christmas Eve, several dozen international demonstrators, joined by a few Israelis and some Palestinians, carried signs in Manger Square denouncing Israel's occupation of the West Bank and Gaza. They marched back and forth from the entrance of the Church of the Nativity to the Peace Center on one side of the square.

Carrying an armful of protest signs after the demonstration, Bassam Bannoura, 45, pastor of the Shepherd's Field Baptist Church in neighboring Beit Sahour, said that local Christians were leaving the Holy Land because of the hardships of Israeli occupation, violence and the rise of Muslim fundamentalism.

He said he had met with a family of Christians who were planning to leave, and he tried in vain to talk them out of it. "They told me, 'We have only one life and we want to enjoy it,"' he said.