Security has been stepped up in the Holy Land as final preparations get under way for Christmas and millennium celebrations.

Israel fears attacks by Muslim militants who want to derail the peace process. On Friday, a small bomb went off near a busy bus station in the northern city of Netanya.

The area had been evacuated before the explosion, and no injuries were reported. The authorities blamed the blast on "nationalists", a code for Palestinians, although there has been no claim of responsibility.

People are determined security fears will not dampen celebrations, although Jerusalem hoteliers say cancellations are running at about 15% after warnings from the US about terror attacks coinciding with festivities.

Another fear for pilgrims has come from cult groups, apparently bent on bringing about the second coming of Christ by initiating a violent confrontation at a sensitive sacred Islamic site such as the Dome of the Rock.

A BBC correspondent in Jerusalem says most pilgrims with apocalyptic views are harmless. However, the authorities have expelled dozens of potential troublemakers.

Christmas Eve jitters increased with a full-page advertisement in Friday's Jerusalem Post declaring: "Earth's final warning: What is the mark of the beast?"

Bethlehem celebrations

Both Israeli and Palestinian authorities are hoping the festivities pass off peacefully.

Thousands are expected to attend midnight mass at the Church of the Nativity in Bethlehem, the traditional birthplace of Jesus Christ approximately 2,000 years ago.

Palestinian leader Yasser Arafat has been greeting foreign leaders who have come for the Christmas celebrations, including the prime ministers of Spain and Italy.

Israel ended its military occupation of Bethlehem just before Christmas 1995. Since then, Christmas Eve in Bethlehem has been a combination of religious festivities and an assertion of Palestinian national aspirations.

"Bethlehem is ready and we welcome every visitor to the city," Mayor Hanna Nasser said.

"The city is open, is free, is secured and is stabilised and we hope everyone will enjoy these very important and remarkable hours."

About 3,000 Palestinian police have been deployed in the city to ensure security during Christmas and New Year's Eve.

Ban lifted

For the first time in many years, Israel says it will lift a blanket ban on Palestinians travelling through Jerusalem to reach Bethlehem for Christmas celebrations - although it still applies to Palestinians aged 16-30.

One Arab Christian who has been prevented from entering Bethlehem since 1992 expressed frustration about being "still at the mercy of Israel".

Jubilee celebrations begin in earnest in 2000, including an historic papal visit in March, and a tourist bonanza is widely expected.