As church bells pealed across Bethlehem, Palestinian police arrived at Israel's military headquarters Thursday to take control of the city where tradition and the Bible say Jesus was born.

Israeli soldiers dressed in flak jackets stood nearby with their automatic rifles at the ready, preparing for the handover of power four days before Christmas. The handover ends 28 years of Israeli occupation.Palestinian leader Yasser Arafat was to visit Bethlehem for the first time on Sunday, Christmas Eve, and deliver a speech from the roof of the Church of the Nativity, which marks the traditional site of Jesus' birth.

Those plans drew protest from some evangelical Christians who charge the PLO leader was exploiting Christmas for political gains before the Jan. 20 Palestinian general elections.

Meanwhile, thousands of Palestinians pushed up against a 30-foot-high chainlink fence sur-round-ing an Israeli police station in Manger Square.

Israeli border police moved seven jeeps to form a protective circle around the fence. They were backed up by Palestinian security forces who formed a human chain around the station.

Outside the Church of the Nativity, Palestinians danced and sang in joy. "The Zionists are leaving us. We are Palestinians, and this town is Arab," chanted Mohammed Assad, 73, as he danced and waved a walking stick.

As a prelude to the change, Manger Square was bedecked with hundreds of Palestinian flags, pictures of Arafat and chains of lights.

With Israel's departure, Bethlehem becomes the sixth West Bank town to come under Palestinian rule as part of the Israel-PLO autonomy agreement.

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Outside Israel's military headquarters, a lone Israeli legislator held a protest vigil earlier Thursday.

"I'm shouting out in pain because they are going to hand over Bethlehem, the city of David, the city of Rachel, to the Palestinian," said Hanan Porath, a leader of the Jewish settlement movement in the West Bank and Gaza Strip.

Right-wing protests have been subdued in the wake of the Nov. 4 assassination of Yitzhak Rabin by a Jewish extremist who said he wanted to wreck the Israel-PLO peace agreements. The army also closed Bethlehem to Israeli motorists Thursday.

Visitors to Bethlehem said Thursday there was genuine cheer in the air this time, compared to the subdued Christmas observances during the 1987-1993 uprising against occupation.

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