They danced in the streets, wrapped themselves in flags and marveled at what they had achieved. For Israel's people, Thursday marked a festive finale to celebrations of 50 tumultuous years of statehood.

For Palestinians, however, the occasion was a bitter reminder of their own lack of an independent state. And Israel's internal splits could be plainly seen even as the country celebrated: last-minute arguments among religious and secular Jews threatened to derail the main gala performance.The perilous birth of the Jewish state a half-century ago - the anniversary of the declaration of the nation of Israel began Wednesday night by the Jewish calendar, and falls on May 14 by the Western one - was hailed as miraculous despite pressing present-day problems, including the breakdown of the Mideast peace process.

"We forget that in 50 years, the people here made a successful country, even with all our wars," said David Ben-Yakov, 41, feeding his little girl a hot dog as she sat in her stroller in a Jerusalem pedestrian mall.

A carnival atmosphere at the opening of festivities Wednesday prevailed into the early morning in city streets, packed with thousands of revelers.

Thursday, families carrying barbecue grills, tents and bags of food made their way to parks for a day of togetherness. Celebrations were to be capped with a glitzy song-and-dance extravaganza tonight at a Jerusalem stadium.

Vice President Al Gore, the guest of honor, arrived Thursday, the highest-ranking foreign dignitary in attendance. He pledged unwavering U.S. friendship.

"We support your dream," he told Israeli religious and political leaders.

Israel, which has fought a war every decade of its existence, used the occasion to show off its military muscle. Fighter jets thundered overhead in formation, and the navy staged an offshore review. Gunboats cut through the blue water while thousands watched from the beaches.

Security was tight for the celebrations. Thousands of troops were deployed at sensitive sites, and snipers and bomb squads stood ready. As a precaution, Israel sealed off the West Bank and Gaza Strip, barring most Palestinians from entering Israel.

For the Palestinians, the anniversary was no celebration. It was a day of mourning. They call Israel's creation "al naqba" - the catastrophe - and blame the Jewish state for usurping their land.

In the West Bank refugee camp where he was born, Sami Rafai, 29, couldn't bring himself to watch the Israeli fireworks off on the horizon.

"The celebrations are like knives in the heart," he said.

Amid the festivities, the fault lines in Israeli society were on clear display, particularly the rifts between religious and secular Jews and the political left and right.

In the religious Jerusalem neighborhood of Mea Shearim, dozens of ultra-Orthodox Jews tore Israeli flags from cars driving through the area. Many ultra-Orthodox Jews in Israel do not recognize the 50th anniversary because they believe the creation of a Jewish state is a blasphemy before the coming of the Messiah.

Hard-line Jewish settlers and Israeli peace activists also appeared headed toward an Independence Day confrontation.

About 2,000 right-wing activists gathered to lay a cornerstone at the site of a controversial planned Jewish neighborhood in disputed east Jerusalem.