BEIT SAHOUR, West Bank (Reuter) -

Under heavy Israeli security, Muslim and Christian Palestinians prayed for peace during a demonstration Friday against Israel's plans to build a Jewish settlement in part of Jerusalem it captured in 1967. Soldiers of Israel's crack Givati infantry brigade in battle gear, backed by snipers and at least one machine gun, took up positions on a hill overlooking the demonstration, as 3,000 Palestinians and Israeli peace activists marched with placards and Palestinian flags from the town of Beit Sahour.

"We, the sons of this land, gathered here with one heart... to pray for peace,'' the Rev. Yaacoub Abu Saada, head of the Malakite church in Bethlehem, said in a speech after the prayers. Tension rose briefly when young demonstrators climbed up the hill near the soldiers. But protest organizers defused the tension by standing between the two sides. The demonstration ended peacefully.

" This is our land. They want to take it and build a settlement. Our village, Um Touba, has been here for 1,000 years and now they want to bring us people from Russia and Ethiopia to live here instead of us,'' said Hussein Abu Tair, a village leader, referring to Israelis who immigrated from the two countries. Israeli Prime Minister Benjamin Netanyahu enraged Palestinians last month when his government approved a plan to build 6,500 homes for Jews on a hill on the southern edge of East Jerusalem called Jabal Abu Ghneim by Arabs and Har Homa by Israel. Israel has annexed East Jerusalem, a move not recognized internationally, and says the entire city will remain its united eternal capital, but Palestinians regard East Jerusalem as capital of a future Palestinian state. The sides are to negotiate the city's final status in talks due to run until May 1999 and the Palestinians see the new housing project as an effort to preempt these and cement Israel's control. Palestinians called for a demonstration of 10,000 people at the site Friday but organizers said Israeli military checkpoints erected on roads leading to the site barred many from joining the protest. Israeli security forces deployed 2,500 policemen and soldiers throughout East Jerusalem and at the site to prevent any possible violence.

"We have information that there is tension in the air,'' newly appointed Jerusalem police chief Yair Yitzhaki told Israel Radio. A team of Palestinian organizers wearing green baseball hats placed themselves between demonstrators and the Israeli forces, who formed a line opposite the protesters. ``We came out today in this peaceful demonstration, but those who decide the outcome are those soldiers and the orders that were given to them,'' Faisal al-Husseini, the top Palestinian official in Jerusalem, told the demonstrators through a loudspeaker. Palestinian Authority Minister Elias Freij, mayor of Bethlehem which is just south of Har Homa, called on Netanyahu to stop settlement and pursue peace. ``I tell Mr. Netanyahu Jews and Palestinians are destined by God to live in this country together and forever,'' Freij said. ``So which is best: to live in peace as good neighbors or to remain as enemies quarreling, fighting and shouting and suffering and screaming?'' Israel further enraged Palestinians Friday when it announced that it was handing back only two percent of some 70 percent of West Bank land still under its exclusive control to the Palestinians under a self-rule deal. Under a proposal narrowly approved by Israel's cabinet overnight, another seven percent of the West Bank would be transferred from joint rule to Palestinian control. About 50 Palestinians youths hurled stones Friday at two Israeli border police jeeps that entered the West Bank village of Beit Ummar, which according to press reports would be included in the further redeployment, witnesses said. The Israelis parked at the entrance of the village but did not respond to the stone-throwers.