Riding high on a Mexican wave

Magnificent ruins, spectacular beaches and an infectious spirit of fiesta: Candida Lloyd raises her margarita to Mexico's Yucatn peninsula and its historical capital, Merida

SUNDAY IS show time in Merida. The city's hot, traffic-ridden central plaza becomes transformed into a carnival. Flags, gaudy bunting and ticker-tape are strewn throughout the square. The owner of a doughnut cart uses a trombone-like contraption to squeeze out rings of sticky goo to be dropped into sizzling oil. Old women and young men queue to sit at makeshift cafes and eat warm tortillas stuffed with blackened turkey, refried beans and chilli salsa. Pineapples are pulped; bags of nuts and brightly coloured sweets are chewed. Middle-aged men in their Sunday best sit on benches to gawp as young couples hold hands and drink Coke. There is music and dance and everyone promenades. Even the more gruesome- looking beggars are out in force, competing for compassion with the nuns at the entrance of the cathedral that stands so severely at one end of the square.

Plaza Mayor, which is flanked by some of the city's oldest and most impressive buildings, is closed off to traffic on Sundays, expect for horse-drawn buggies and tourists riding in cycle rickshaws.

Merida is the capital of the state of Yucatn, in the far east of Mexico. The Maya people have survived invasion, enslavement, disease and oppression and make up a substantial part of the population. Situated in the north east of the flat Yucatn peninsula, this can be a stop-off from the Caribbean beaches several hours away, and is close to the world-famous Mayan Indian ruins at Chichen Itz and Uxml. It is a city of narrow streets, shady squares, hidden courtyards, crumbling colonial buildings, noise and dirt.

The Yucatn has a distinct culture, sense of pride and political identity. The original Maya city of Tiho - where Merida now stands - was conquered by the Spanish in 1542. The conquistadores held on to their colonial capital until the mid-19th century. At the turn of this century, merchants who had grown rich on the trade in sisal rope brought great wealth to Merida. The city retains a European feel, with many of the older buildings built from French bricks and tiles, brought over as ballast in trading ships. The area remained cut off from the rest of Mexico until road and rail links were built in the Sixties. Today, the wealth has evaporated, but the city is still full of energy.

Child beggars are common. Many are ingenious. One 12-year-old boy challenged us with a wooden pyramid puzzle. When we failed to reassemble it, he offered to sell a packet of chewing-gum for the equivalent of 2p (we bought a large chunk of his stock). Other children, some so young that older brothers and sisters have to carry them around, live and work in and around the city squares.

You can hardly avoid them as you explore the place, and it's an easy city to get around by foot. We stopped occasionally, escaping from the heat and dust to have a cold beer and wickedly hot salsa, or to dive into a juice bar to choose from a selection of exotic pulverised fruits and vegetables.

A contrast to the cool squares and many of the hotel's beautiful, if slightly faded, antechambers is the city's gigantic main market. A fug of noise and odours pours from the many entrances. The market is divided by narrow, dark walkways. Sacks of spices are piled next to TV and radio repair stalls. Nearby, squat women knead dough to be transformed into sackfuls of warm tortillas via a mini-furnace and a conveyor belt - a bit like a scene from Charlie and the Chocolate Factory. In another section, there are cramped cafes where large, blackened turkeys are shredded by hand for the obligatory tortillas and beans.

Piles of leather shoes and belts compete for the attention with modern electronic toys, traditional clothes and squealing animals. Then there are the hammocks for which Merida is renowned - shop after shop of them, each with its own energetic hawker looking for business.

A 10-minute walk takes you to the tranquil courtyard of the new Museo de Arte Contemporneo Arteneo de Yucatn, which is supposed to be the finest art museum in the state. It does not appear to be the most popular. On our visit, there were more guides than guests, with smiling attendants holding open the door to each gallery. It contains works by well known artists from Yucatn, as well as a room of copies of European modern masterpieces. But the most interesting exhibition is one of Mexican families at home. The ethnic mix is startling - from blond, lightly tanned city dwellers standing proudly in front of a new settee and video, to intensely dark-skinned Mayan Indians in mud huts.

Much of this seemed a far cry from Merida's grander past. Close to the city's main square, near to Parque Hidalgo, is a clutch of colonial hotels. Posada Toledo is one such building, a beautiful 19th-century structure with an exquisite courtyard. The owner showed us the hotel's bridal suite, which had been beautifully restored with fine mouldings and antique furniture. There was even a second room leading from the bedroom, where the relatives of the newly married couple would stay: an instant passion-killer. The owner said she was worried about offering the room for rent because it was so expensive: it cost about pounds 17 a night.

The night-life, meanwhile, is hot and humming. There are restful bars, noisy cafes and traditional Mexican restaurants. Everything is done with smiles, bowls of hot salsa and tortilla chips, and good grace.

And, of course, a few hours out of town lie some of the country's most spectacular Mayan sites. To get there, you can take the second-class coach service that rattles through dusty villages, each clustered around its own enormous church, where young men selling fruit and flavoured ices leap aboard at each stop. If you have less time, and more money, there are fast, cheap, air-conditioned first-class coaches.

Alternatively, a coach will whisk you to the east coast in about four hours. If you like eating at beach bars while downing margaritas as big as goldfish bowls, and have a penchant for Caribbean seas and sand, then the laid-back resort of Playa del Carmen is heaven.