There are a lot of folkloric-looking taverns in the city center, many on such thoroughfares as Rua Gil Vicente and Rua de Santa Maria. For dancing and insight into what the northern Portugal hipsters are doing, head about 5km (3 miles) east. On the opposite side of the mountain that looms above the town center, you'll find Elite, Estrada A Penha (no phone). It doesn't have a formal address, but it's signposted from the town center.
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