Following the weekend's violence, parts of Bethlehem were left looking like a war zone, with several houses close to Manger Square destroyed.

BBC: Israel considers further withdrawal

Earlier, as Palestinian bands played marching songs, thousands of people - mainly Palestinians but some foreign pilgrims as well - filled Manger Square for a plaque-unveiling ceremony.

BBC: Bethlehem begins millennium celebrations

BETHLEHEM, West Bank (CNN) -- In the Christmas Eve morning parades in Manger Square, the tunes were firmly nationalist as Palestinians celebrated the withdrawal of Israeli troops after 28 years of occupation.

CNN: Muslims, Christians celebrate in Bethlehem