Thousands heard the pope deliver his "Urbi et Orbi" (to the city and the world) speech, reports .
Wearing shimmering gold vestments and a golden miter, the pontiff delivered his speech from the balcony of St. Peter's Basilica to a cheering crowd in the sunlit square below.
"With deep apprehension I think, on this festive day, of the Middle East, marked by so many grave crises and conflicts, and I express my hope that the way will be opened to a just and lasting peace," Benedict said, making a special mention of the Israeli-Palestinian conflict.
"I place in the hands of the divine Child of Bethlehem the indications of a resumption of dialogue between the Israelis and the Palestinians, which we have witnessed in recent days, and the hope of further encouraging developments."
In a separate, written message to Roman Catholics in the Middle East, the pope said he hoped to travel to the Holy Land and pray in Jerusalem as soon as circumstances permit it.
Benedict also spoke of the violence in Lebanon, Iraq, Sri Lanka, Darfur and the whole of Africa, as Ethiopian fighter jets bombed airports in Somalia and more people died in suicide bombings in Iraq.
"I pray to God ... that throughout Africa there will be an end to fratricidal conflicts, that the open wounds in that continent will quickly heal and that the steps being made toward reconciliation, democracy and development will be consolidated," he said in a speech televised in nearly 60 countries.
Under his predecessor, Pope John Paul II, the Christmas Day message became an occasion to review progress and setbacks for humanity. Thousands of people attended Benedict's address Monday, filling the square that included a life-size Nativity scene and a Christmas tree with silver decorations that shimmered in the sunlight.
Benedict, who hours earlier celebrated Midnight Mass inside St. Peter's, also issued an appeal for the poor, the exploited and all those who suffer.
"This humanity of the 21st century appears as sure and self-sufficient master of its own destiny, the avid proponent of uncontested triumphs," the pope said. "Yet this is not the case. People continue to die of hunger and thirst, disease and poverty, in this age of plenty and unbridled consumerism."
"Some people remain enslaved, exploited and stripped of their dignity; others are victims of racial and religious hatred, hampered by intolerance and discrimination. Others see their own bodies and those of their dear ones, particularly their children, maimed by weaponry, by terrorism and by all sorts of violence at a time when everyone invokes and acclaims progress."
It is for this reason, the pope said, that Jesus Christ is reborn.
"For He knows that even today we need Him," Benedict said. "Despite humanity's many advances, man has always been the same: a freedom poised between good and evil, between life and death."
Benedict also mentioned people's struggles not related to war and poverty.
"How can we help those who are misled by facile prophets of happiness, those who struggle with relationships and are incapable of accepting responsibility for their present and future, those who are trapped in the tunnel of loneliness and who often end up enslaved to alcohol and drugs," he said.
The pope also reiterated the importance of human life, in an apparent reference to the case of a paralyzed Italian euthanasia activist, Piergiorgio Welby, who died last week after having his doctor disconnect his respirator.
"What are we to think of those who choose death in the belief that they are celebrating life?" Benedict asked.
Welby was mourned at a lay funeral Sunday, after the Catholic Church denied him a religious ceremony.
At the end of his speech, the pope delighted pilgrims and tourists by delivering Christmas greetings in more than 60 languages.