BETHLEHEM, West Bank - Encouraged by renewed peace talks between Israel and the Palestinians, Christian pilgrims from around the world converged on Jesus' traditional birthplace yesterday to celebrate Christmas - a palpable contrast to the sparse crowds of recent years.

The diverse mix of people included festive American tourists, clergymen in brown flowing robes, and Palestinian scouts wearing kilts and playing bagpipes.

"I'm Catholic. I always wanted to see the beginning of Christianity, the whole history. It's something you grow up with," said Kristin Obeck, a 37-year-old schoolteacher from Richmond, Va.

Despite the festive atmosphere, a heavy police deployment, the presence of Israel's separation barrier and unease among Bethlehem's ever-shrinking Christian population served as reminders of lingering tensions.

Tourism has begun to recover in recent years as terrorism and fighting have slowed. This year, it got a boost from the renewal of peace talks last month at a summit in Annapolis, Md.

Israeli tourism officials said they expected 20,000 visitors to cross from Jerusalem into neighboring Bethlehem, an increase of about 50 percent over last year. Tourism workers handed out sweets and flowers to pilgrims, and smiling Israeli soldiers posed for pictures with travelers.

Bethlehem's governor, Saleh Tamari, said all of the town's 5,000 hotel rooms were booked.

Tiago Martins, 28, from Curitiba, Brazil, said the new peace talks had prompted him to visit Bethlehem for the first time.

"The idea that it's a Christian city makes me more calm, and I think going to the West Bank is more comfortable since Annapolis," Martins said.

Priests and monks, tourists, Palestinian families and police mingled in Manger Square outside the Church of the Nativity, the site where tradition holds Christ was born.

Vendors hawked beads, inflatable Santas, roasted peanuts, cotton candy, steamed corn and Turkish coffee while city residents watched the festivities from balconies and rooftops.

A four-story cypress tree, strung with lights and red and gold ornaments and topped with a yellow star, towered outside the church.

Children strolling through the square wore red-and-white Santa Claus hats, with some in full Santa regalia. Balloons bobbed from vendors' stands and strings children clutched in their hands. After nightfall, the square was lit in a sea of red and yellow lights and Christmas stars.

"This year is much better than the last seven years for tourism," said shopkeeper Jacques Aman. "The atmosphere is better in general. There is relative calm, from the security standpoint."

Palestinian scouts, some wearing kilts and berets adorned with pompons, marched through the streets playing drums and bagpipes. Throughout the evening, choirs and orchestras performed hymns and Christmas carols in a multitude of languages.

Latin Patriarch Michel Sabbah, the top Roman Catholic official in the Holy Land, began Christmas celebrations with his annual procession from Jerusalem to Bethlehem.

Sabbah entered Bethlehem by passing through a massive steel gate in Israel's separation barrier - a stretch of concrete slabs built to keep suicide bombers from reaching Israel. Israeli mounted policemen escorted Sabbah, in his flowing magenta robe, to the gate, and border police shut it behind him.