New Zealand's capital transformed into a fantasyland of dwarves, elves, trolls and goblins Wednesday as tens of thousands of people lined the streets of central Wellington to celebrate the world premiere of The Hobbit: An Unexpected Journey.

Characters from The Hobbit and The Lord of the Rings, the two iconic works conceived by JRR Tolkien more than half a century ago, thronged around the 500-meter red carpet under a bright spring sun to cheer the film's stars and makers.

Fans from around New Zealand and the globe waited in the city's Courtenay Place, many wearing home-made costumes.

Some had begun arriving Tuesday to secure their places to see stars such as British actors Martin Freeman and Richard Armitage, Australian stars Hugo Weaving and Cate Blanchett, and US cast member Elijah Wood.

But the first to raise a cheer was New Zealand director Peter Jackson, who emerged on to the red carpet early in order to meet the fans.

Jackson, who also made The Lord of the Rings (LOTR) -- a trilogy that garnered 17 Oscars -- from 2001 to 2003, said in a televised interview that he was delighted at the reception from his hometown.

Weaving, who played elf lord Elrond in both The Hobbit and LOTR, described the atmosphere to TV3, "It's more like a national holiday than the celebration of a film."

Titanic and Avatar director James Cameron, who owns property in New Zealand, was also on the red carpet.

He told TV3 that the film's screening rate of 48 frames a second -- twice the normal speed for a feature film -- make the fantasy world "shockingly real."

"I'm very anxious to see the film and very interested to see the 48 frames a second technique," he said. "It's so frighteningly real."

Prime Minister John Key told the crowd just before the screening that it was "a night of celebration and fun and entertainment," but they should also pay tribute to the genius of Jackson.

"We have a very special message to Peter Jackson, first we wish you the very best of luck, and secondly, don't stop at three," Key said, referring to the fact that An Unexpected Journey was the first in The Hobbit trilogy.

He also thanked the New Zealand public for their support for filming The Hobbit , which was bedeviled by controversies, including a dispute with actors that led to a hurried change in labor laws and massive financial incentives totaling more than 90 million NZ dollars (73.96 million US dollars) from the government.

Key said the film had resulted in about 6,700 domestic flights taken, 93,000 hotel beds filled, 18,000 rental cars hired and 380, 000 NZ dollars spent on coffee.

Wellington, rebranding itself as the Middle of Middle-earth after the setting of Tolkien's works, was at the center of a nationwide wave of Hobbit mania, which included a presenter on national television network TVNZ reading Wednesday's weather in elvish, one of Tolkien's created languages.

New Zealand's tourism bosses have gone all out with Tourism New Zealand expanding its "100% Pure" campaign to "100% Middle-earth, 100% Pure New Zealand" to capitalize on the film, the first in its own trilogy.

Air New Zealand, the national carrier, has unveiled the largest- ever graphic applied to an aircraft, with a Boeing 777-300ER decked out in Hobbit-inspired livery, and a Middle-earth-inspired in-flight safety briefing that clocked up 9 million Internet viewings in just eight days.

The aircraft did a low-level flyby over the red carpet Wednesday, banking slowly so the crowd could see the cast of characters emblazoned on its fuselage.

The international airports in Auckland and Wellington have been decorated with Hobbit scenes with help from Weta Workshop, the Wellington-based film design studio that worked on The Hobbit and LOTR.

At a press conference earlier in the day, Jackson hit out at animal rights protestors who turned up at the red carpet to protest alleged cruelty on the set.

Jackson rejected claims from People for the Ethical Treatment of Animals (PETA) that two dozen animals, including horses, goats and sheep, were injured or killed in the making of the film, saying there was "no abuse, no mistreatment, absolutely none."

Also at the press conference, Australian comedian Barry Humphries, the film's Goblin King, joked that Jackson had done "an incredible thing."

"He has turned Wellington into the artistic capital of the Southern Hemisphere and that is no mean feat," said Humphries.

The film is scheduled for nationwide release in mid December.