"If we listen to the relentless news headlines, these words of light and hope might seem like words from a dream," the pope said in his homily.
"Our hearts this Christmas are anxious and distressed because of the continuation in various parts of the world of war, social tensions and the painful hardships in which so many people find themselves. We are all seeking an answer that will reassure us," the pontiff said.
The traditional Mass moved back inside St. Peter's Basilica after a one-year stint outdoors in St. Peter's Square. The pontiff celebrated Christmas Eve Mass outdoors last year to accommodate the pilgrims who flocked to Rome during the Vatican's Holy Year celebrations.
The pope, appearing in relatively good form, ushered in one of Christianity's most joyous holidays during a midnight Mass inside St. Peter's Basilica, which glistened with flashbulbs and floodlights.
Outside, police searched pilgrims' bags and purses and used metal-detecting wands as part of the Vatican's anti-terrorism security.
While the Italian media have said the Vatican is a prime terrorist target following the Sept. 11 attacks, security measures resembled those taken during the past two Christmas holidays, which flanked the Vatican's Holy Year festivities that drew millions of pilgrims to Rome.
John Paul, 81, opened this year's Christmas celebrations by lighting a single candle in the window of his apartment overlooking St. Peter's Square on Monday evening — a silent vigil for peace that has been a hallmark of his 23-year papacy.
Out in the bone-chilling piazza, bands played Christmas carols as a life-sized creche was unveiled next to a 25-meter-tall (82-foot-tall) Christmas tree decked with gold and silver balls. Church bells heralded the start of the Mass and a boy's choir sang sweetly.
Despite the joyous scene, the weight of the world's woes cast a shadow over the Vatican as it marked the birth of Christ.
The Vatican announced Monday that an appeal to the faithful to fast on Dec. 14 in the name of peace and to donate money instead to victims of terrorism raised $650,000.
The Vatican also said it had taken diplomatic steps to try to head off what it called the "arbitrarily imposed" decision of Israel to block Palestinian leader Yasser Arafat from attending midnight Mass in Bethlehem, the birthplace of Jesus.
On Tuesday, the pope is to deliver his traditional Christmas day message, "Urbi et Orbi" (Latin for "to the city and to the world"), followed by greetings in dozens of languages to pilgrims in St. Peter's Square.
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