By Ari Rabinovitch

NAHARIYA, Israel, Aug 15 (Reuters) A traffic jam today was the clearest sign that one northern Israeli town hit by Hizbollah rockets was on the road to recovery.

Cars filled with residents returning home to Nahariya, a popular vacation spot on the Mediterranean, replaced the military vehicles that had rumbled along its tree-lined main street before a ceasefire went into effect yesterday.

''I am glad I left but even happier to be back,'' said Shimon Chen, 30. ''The government is telling us to come back north but I'm not so quick to trust the ceasefire. However, at some point, we have to get back to our daily routines.'' Chen spent the last month in a tent city authorities erected in southern Israel for residents of the north seeking refuge from daily Katyusha barrages from Lebanon.

More than half of Nahariya's population of about 50,000 left town after the rockets began to fall. Many, like 76-year-old Penny Ramazor, stayed with relatives down south, out of the line of fire.

''My heart hurt to see rockets falling on TV. I've lived in the north all my life and this is the first time I've had to leave,'' said Ramazor, returning from her grand-daughter's home near Tel Aviv.

''Now it is quiet, but we are all anxious and hesitant. We are coming back to see what will happen,'' she said.

In a scene repeated across northern Israel, supermarkets, shops and cafes reopened in Nahariya, 10 km (six miles) from the Lebanese border.

Its fashionable main avenue emerged largely unscathed from the rocket attacks.

A steady stream of families returning to the town walked home from the train station, while others disembarked from taxis.

REUTERS KD HT1740