TALK about a false dawn. As day broke over Hebron, the Israeli military commander completed the formal handover of four-fifths of this city to his Palestinian counterpart, and for a few idyllic morning hours it did seem as though some kind of genuinely new day was beginning.

The rapturous reception that had greeted the arrival of Yasser Arafat's uniformed police force, late the night before, gave way to cheering and a most unHebron-like mid-morning atmosphere of cheerfulness. It even spread as far as Shuhadah Street, the thoroughfare that runs past the Jewish settler enclaves towards Abraham's reputed burial place at the Cave of the Patriarchs, in the centre of the remaining 20 per cent of the city still occupied by the Israeli army.

In the bustling vegetable market, where an off-duty Israeli soldier, Noam Friedman, had opened fire and wounded several Palestinians just a fortnight ago, the green, blue and beige uniformed Israeli security personnel chatted, relatively easily, with traders and shoppers.

And from down the hill opposite, a stream of Hebronites walked unhurriedly out of the newly-Palestinian-controlled sector of the city and down into the Israeli zone to Friday Ramadan prayers at the Cave, the holy site they know as the lbrahimi Mosque.

The sun put in an appearance, the swarms of international TV crews milled around fairly aimlessly, congregating around any of the Jewish settler leaders to emerge from the nearby Avraham Avinu enclave, the soldiers watched fairly benignly from their sand bag and concrete-reinforced look-out posts on the rooftops.

But by midday, the idyll was over. First, there was what sounded like a single gunshot, from behind the fruit stalls. A couple of dozen Israeli soldiers moved in to investigate. Then, it seemed as though a tall, bearded Jewish settler got engaged in an argument with a knot of Palestinians. Someone lobbed a banana. Then an orange. A large radish followed, and then still more fruit and vegetables.

An Israeli army jeep revved up, and within seconds the loudspeakers were blaring. Soldiers chased young Hebronites out of the market, and announced that a curfew was being imposed with immediate effect.

Some of the journalists thought they'd seen stones thrown. Others corrected them. The CNN correspondent, on the line to the studios in Atlanta, urged his editors not to give his report that incendiary "Breaking News" logo. There was no real violence yet, he assured them, just a bit of scuffling.

Within a few minutes the market place was abandoned, the piles of produce miraculously cleared away. Plainclothes agents from Jibril Rajoub's Palestinian security apparatus mingled discreetly among the dispersing Palestinians, urging them not to make trouble with the Israelis, helping keep the lid on things; despite the fact that, officially, they should not be deployed in this area, still formally under sole Israeli rule.

On what is now the Palestinian side of the city, the Israelis have merely folded up the last few tents taken down the last handful of positions, completing a pullout that was effectively carried out months ago.

What remained for the Palestinian police to do yesterday was shake hands with local children still impressionable enough to adore them, and create new bottlenecks at junctions where, in the absence of uniformed attention, traffic had hitherto flowed smoothly.

And on what remains the Israeli area, with its 400 or so Jews and its 20,000 Palestinians, the swift resort to curfew emphasised the sorry sense of business as usual.

A few hundred yards up the hill from the marketplace, a small group of middle-aged men, gathered in a grocery, joked that Israel's Prime Minister Netanyahu and Yasser Arafat were probably cousins. "We certainly can't tell them apart," said one of them wryly.

IN the surreal tableau that is downtown Hebron, no sooner had the Palestinians been sent indoors than the settlers began to make their presence felt.

Shani Hurwitz (37), a mother of seven from Brooklyn, pulled up, tearful, in the town centre, two of her young daughters hunched in the back seats, to complain to the local army chief that her car had been jostled by Arabs a few hundred yards back, and that the army, far from rescuing her, had told her she was driving in a closed military zone.

One officer tried to reassure her, told her to lodge a complaint. But now other settlers began to gather. Orit Struck, a mother of eight in her slippers, staged an impromptu "stand-in" protest, blocking an Italian journalist's car, creating a traffic jam, and saying she wouldn't move unless the army allowed Mrs Hurwitz to drive on up Shuhadah Street, despite the one-way signs pointing the other way.

The journalist began screaming at the soldiers to clear the road. A Palestinian child rode up on donkey, and was shoved away by three soldiers. And then Benny Elon, an extreme right-wing Knesset member, arrived, told Mrs Struck to stop blocking the traffic, and instead had the settlers encircle Mrs Hurwitz's car, demanding to speak to the highest-ranking officer in the area.

After a few more minutes of argument, Mrs Hurwitz, still in tears, was persuaded to drive back the way she'd come. The camera crews dispersed. The army got back to enforcing the curfew.

Further down the street, a fresh contingent of Israeli Border Police, batons like baseball bats in hand, began fanning out to ensure no Palestinians dared drive or even walk outdoors. One trader who'd yet to disappear with his barrow of bananas was screamed at: "Get inside, now - or I'll arrest you and shove you in the jeep."

Before he could comply, another policemen walked past and kicked out viciously at the metal scales on the ground next to the barrow, sending them crashing over. "What did you do that for?", the trader shouted.

The answer, though the Israeli policeman didn't bother to give it, is because nothing has been altered in this part of Hebron. Because here, as they have done since the settlers returned with Israel's 1967 capture of the city, the Jews and the Palestinians live right next door each other in mutual revulsion.

And as both sides will tell you, if you feel the need to ask, sooner rather than later that friction will spark an almighty explosion.