HAVANA - Bells tolled in celebration and teachers halted lessons midday as President Raul Castro told his country Wednesday that Cuba was restoring relations with the United States after more than a half-century of hostility.

Wearing his military uniform with its five-star insignia, the 83-year-old leader said the two countries would work to resolve their differences "without renouncing a single one of our principles."

Havana residents gathered around television sets in homes, schools, and businesses to hear the historic national broadcast, which coincided with a statement by President Obama in Washington. Uniformed schoolchildren burst into applause at the news.

At the University of San Geronimo in the capital's historic center, the announcement drew ringing from the bell tower. Throughout the capital, there was a sense of euphoria as word spread.

"For the Cuban people, I think this is like a shot of oxygen, a wish come true, because with this, we have overcome our differences," said Carlos Gonzalez, 32, an IT specialist. "It is an advance that will open the road to a better future for the two countries."

Guillermo Delgado, 72, a retiree, welcomed the announcement as "a victory for Cuba because it was achieved without conceding basic principles."

Yoani Sanchez, a renowned Cuban blogger critical of the government, said the development came with a price. Castro, she wrote, had made a "bargaining chip" of Alan Gross, the U.S. aid worker who was released from prison Wednesday while the United States freed three Cubans held as spies.

"In this way, the Castro regime has managed to get its way," she wrote in a blog post. "It has managed to exchange a peaceful man, embarked on the humanitarian adventure of providing Internet connectivity to a group of Cubans, for intelligence agents that caused significant damage and sorrow with their actions."

Obama had already loosened some travel, trade, and financial restrictions that have boosted remittances to an estimated $2 billion annually, while Castro has ushered in some significant free-market reforms, opening the door to private businesses. The result has been more opportunities for some, and more goods available for those who can pay.

While the measures announced Wednesday don't include a lifting of the trade embargo, Cubans hope they will see more tourists and more hard cash.

Others said they would wait and see.

"It's not enough," said Pedro Duran, 28, "since it doesn't lift the blockade. We'll see if it's true, if it's not like everything here: one step forward and three steps back."

But Diego Moreno, 58, said the news was more than he had expected: "Finally, the reason and sensibility of both countries has triumphed."