"As brutal and unfair and horrible as Jacques' death was, we have to look deep into our hearts to find the light," said Rouen Archbishop Dominique Lebrun.
Attacks take toll on French tourism
Some 2,000 mourners packed the soaring Gothic sanctuary, with hundreds more watching the ceremony, which began minutes after a heavy rainstorm, on a giant screen outside.
A section of pews in the 11th-century cathedral was filled by residents of Saint-Etienne-du-Rouvray, the nearby industrial town where the two militants, both 19, slit Hamel's throat as he celebrated mass in an attack that shocked the country as well as the Catholic Church.
A red stole, symbolising Christ's martyrdom, was draped over a giant cross beside the altar, with the Rouen diocese explaining that "Father Hamel's death was similar to that of Christ, unjustly convicted and put to death."
Another red stole was set atop a white priest's vestment lying over Hamel's coffin.
In a show of inter-faith solidarity, Muslims and Jews were among the mourners.
"It was a duty," Hassan Houays, a Muslim maths teacher from Saint-Etienne, told AFP. "We are here so that we can get along together."
Reconciliation was an overarching theme of the mass, which recalled Jesus urging his followers to "love your enemies and pray for those who persecute you."
Hamel's sister Roselyne told the congregation: "Let us learn to live together. The world has so much need for hope."
French religious leaders call for reinforced security after church attack
Archbishop Lebrun said the Christian, Muslim and Jewish communities have "decided to come together to say 'never again'."
Along with churches across France, the Rouen cathedral had on Sunday seen Muslims attend mass in a gesture of solidarity after the grisly attack, with the visitors paying a moving tribute to Hamel while denouncing radical Islam.
French Interior Minister Bernard Cazeneuve, whose portfolio also includes inter-faith relations, led the political delegation to the mass.
As on Sunday, security was tight for Hamel's funeral, with around 20 riot police vans stationed around the cathedral and police closely checking mourners' bags and backpacks.
The church attack came less than two weeks after another assailant ploughed a 19-tonne truck into a massive crowd celebrating Bastille Day in the Riviera city of Nice, killing 84 people and wounding more than 300 others.
Hamel is to be buried in a ceremony attended only by close family members, at a location that has not been revealed.
Hollande vows war on IS 'by every means' after church attack
The frail octogenarian became the latest victim of terror in France when the two fanatics stormed his church in the small Normandy town of 30,000 people.
Abdel Malik Petitjean and Adel Kermiche had pledged allegiance to the Islamic State group and both were shot dead by police after a tense hostage drama in which a worshipper was left seriously wounded. Three other hostages escaped unharmed.
The attack stunned France's religious communities, sparking fears of tensions in a country with a population of some five million Muslims, one of Europe's largest.
The extremist attacks in France have raised tough questions about security failures and fears that mosques may have been used as vectors for extremism.
Cazeneuve said Monday that authorities had shut down around 20 mosques and prayer halls considered to be preaching radical Islam since December.
A debate is also emerging about foreign funding of mosques. Critics say murky financial help from abroad has helped to promote Salafism, an ultra-conservative form of Sunni Islam, and greater transparency would encourage moderates.
Prime Minister Manuel Valls hinted Tuesday at the possibility of "a form of public financing" for Islam in France.
Writing in the leftwing daily Liberation, Valls sketched the possibility of modifying a 1905 law that separates church and state, and is revered by many secularists.
The law forbids the state and local authorities from subsidising religious activities.
France church attackers 'smiled' and spoke of Quran
"Modifying the 1905 law would open up a very perilous debate, but we should examine all solutions, without denying ourselves a form of public financing," Valls said.
Valls came under immediate fire from conservatives and leftwingers for making the suggestion.
Some political figures have recently floated the idea of imposing a small levy on the certification of halal food to finance mosques.
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