Christian faithful from around the world are descending on the biblical city of Bethlehem for Christmas Eve celebrations at the traditional birthplace of Jesus.

The mood in Bethlehem has been dampened by a three month-long wave of Israeli-Palestinian violence that shows no signs of relenting.

Marching bands and scout troops played festive music as hundreds of people began crowding into Manger Square on Thursday, admiring the town's Christmas tree.

Latin Patriarch Fouad Twal led a procession from his Jerusalem headquarters into Bethlehem, passing through Israel's concrete separation barrier, which surrounds much of the town. Israel built the barrier a decade ago to stop a wave of suicide bombings. Palestinians view the structure as a land grab that has stifled Bethlehem's economy.