Palestinian Authority President Mahmoud Abbas said Friday that he hopes a Palestinian state will be established next year.

Abbas, who traveled to Bethlehem to greet Christmas revelers in the West Bank city, said "we are seekers of peace in the path of Jesus."

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"We hope that next year will be a year of peace by establishing the independent Palestinian state with Jerusalem as its capital, living side by side with Israel in peace and security," he added.

The traditional birthplace of Jesus celebrated its merriest Christmas in years, as tens of thousands of tourists thronged the West Bank town for the annual holiday festivities.

Officials said the turnout was shaping up to be the largest since 2000. Unseasonably mild weather, a virtual halt in Israeli-Palestinian violence and a burgeoning economic revival in the West Bank all added to the holiday cheer.

By nightfall, a packed Manger Square was awash in red, blue, green and yellow Christmas lights.

Merrymakers blasted horns, bands sang traditional Christmas carols in Arabic, boy scout marching bands performed and Palestinian policemen deployed around the town to keep the peace.

A group of 30 tourists from Papua New Guinea, all wearing red Santa hats, walked around the nearby Church of the Nativity, built on the site where tradition holds Jesus was born. Both church officials and the Palestinian president voiced hopes for peace.

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