www.canada.com Thousands of Palestinians and tourists flocked to the Christmas Fayre in Bethlehem  where festive magic has returned to the birthplace of Christ after five years of bloodshed.

It marked a comeback for the annual shopping extravaganza, first organized in 1999 but suspended for five years because of the intifada.

Merchants sold sculptures in olive wood, trinkets and traditional delicacies at outside stalls.

Particularly well patronized was the stand run by Nivin al-Sus, who dished out free wine gently warmed by candlelight. Affaf Bahnan, the owner of a nearby boutique, rubbed her hands in delight. "It's been several years since we've sold anything. Bethlehem has a new lease of life thanks to Christmas," she said.

.Victor Batarse, the Christian Mayor of the Muslim-majority town, agreed things were finally looking up.

"Christmas this year is special. You can see we have many more decorations than in previous years," he said. "We are expecting 30,000 tourists in comparison with 18,000 in 2004."

In Bethlehem's famed Manger Square, with the Church of the Nativity on one side, the town hall and a mosque on the other, buses dump off tourists before heading off to park in a multi-storey car park especially set up to relieve traffic congestion.

Guides, waving their accreditation from the Palestinian tourism ministry, mingle with the pilgrims offering guided tours of the Basilica and other local hot spots.

Young people, bursting with enough festive spirit to dress up as Santa Claus, hand out candies to children. And the traditional Christmas tree covered in wreaths and fairy lights towers over the square.

Hotel proprietors, who have endured years of poor business, say they are finally starting to turn the corner.

"The number of guests is larger than the last four years. I still have empty rooms but I am expecting more reservations at the last minute, especially after midnight Mass," said Khaled al-Bandak, who runs the 107-room Grand downtown.

To safeguard security, 800 police officers have been mobilized to protect Manger Square and the environs of the church, said local police chief Issa Hijjo.

He says the Israeli army had agreed to abstain from military operations in Bethlehem over the Christmas period  in order to avoid any possible heightened tensions that could mar the Christmas festivities.

An Israeli army spokeswoman said only that crossings would be open 24 hours a day in order to allow people from all over to visit the town for the Christian holiday.