BETHLEHEM, Occupied West Bank (AP) _ Under the watchful eye of Israeli soldiers, an unusually sparse crowd of worshipers celebrated Christmas Eve at the site of Jesus' birth.

A choir from Jerusalem sang holiday carols in Manger Square under a light drizzle. The festivities were subdued because of fears of violence raised by the 3-year-old Palestinian uprising and the Persian Gulf crisis.

German tourist Gabriele Beitz, who came with her husband and 11-year-old daughter, said the atmosphere in Bethlehem was ''very, very fearful.''

''We are very depressed about the place and about the whole political situation here,'' she said. ''For us, Christmas is an event of peace, and here you cannot feel peace.''

Bethlehem's Palestinian town officials canceled Christmas celebrations in solidarity with the uprising against Israeli occupation. Uprising leaders had distributed leaflets prohibiting Palestinians from celebrating publicly, and ordering shops and restaurants to close for the day.

The town boasted few decorations.

The Roman Catholic patriarch of Jerusalem, Michel Sabah, led a traditional procession to Bethlehem before leading prayers at midnight Mass in neighboring St. Catherine's Church.

Sabah prayed for a peaceful resolution of the gulf conflict.

Jesus ''shows us the way of love we need today on the eve of a world war, especially under these circumstances, we need peace,'' he said in Arabic and French.

''Our sins will be great if we are not brothers, if our sons from both sides are brought up in hatred and violence. We must build justice, there must be a change.''

About 2,000 Palestinians and European diplomats attended the midnight Mass, which opened a holiday season in the Holy Land featuring three celebrations of Jesus' birth. The others are the Greek Orthodox Christmas on Jan. 7 and the Armenian Orthodox celebration Jan. 19.

Hundreds of soldiers and police guarded Bethlehem as white-robed priests earlier led Sabah, the first Palestinian to head the Roman Catholic Church in the Holy Land, into the Church of the Nativity, built over a grotto where tradition says Jesus was born.

Sabah, wearing purple robes, was greeted in Manger Square by the Israeli military governor of Bethlehem, Dudu Mufaz. The tradition dates to the 19th century, when Ottoman Turks ruled Palestine.

Altar boys carrying candles then led Sabah to pray in the grotto of Jesus' birth.

This year only one foreign choir performed in Manger Square on Christmas Eve, that of the First United Methodist Church of Oklahoma City.

The 19 singers wore green robes and sang ''Gloria,'' ''Silent Night,'' and ''Oh Bethlehem,'' as people in the crowd held lit candles.

Nick Harris, senior pastor of the church, said not all the group came on the trip because of menacing news from the Middle East.

Because of the gulf crisis and the uprising, only a few dozen tourists wandered through Manger Square during the day, though the crowd swelled to several hundred after nightfall.

In past years the square swarmed with people and was awash in colorful lights. On Monday most of the color was in the red, purple and green berets of the Israeli security forces standing guard around the square.

Father Wally Anthony, a Catholic priest from Flint, Mich., now with the church in Rome, said of the scene: ''Sometimes when you read the Scriptures, you read about the soldiers there in the times of 2,000 years ago, and you can identify with that same kind of environment.''

Mayor Elias Freij, a Palestinian, told reporters he was praying for ''peace on earth and good will toward all people, and peace in the Holy Land between Israelis and Palestinians, and peace amongst all the Arabs.''

Freij blamed lack of tourists on a U.S. State Department advisory warning Americans not to travel to the Mideast or go to the occupied territories.

Security was especially heavy because of a wave of Arab attacks on Israelis after the Oct. 8 Temple Mount riot in which Israeli police killed 17 Palestinians.

As a Christmas gesture, the military announced it was releasing 217 Palestinian prisoners. Most had less than a month to go in their sentences.

But curfews kept 15,000 Arabs inside their homes in three nearby refugee camps.

In the nearby Hebron district, soldiers fired on two Arab suspects who resisted detention, killing one and wounding another, an army spokesman said.

The slain man, not identified, was suspected of killing an Arab woman and shooting at Israeli soldiers, the spokesman said. The national Itim news agency said both men carried knives.

The death raised to 779 the number of Arabs killed by Israelis in the 3- year-old uprising. An additional 323 were slain by fellow Arabs, most as alleged collaborators with Israel, and 57 Israelis also have died.