Lisbon, Portugal

According to legend the word Lisbon, originally Olisipo, might come from a Phoenician word meaning "safe harbour" or, based on Roman authors, from Odysseus, a reference to the founding of the city by the mythical hero on his way back home from Troy (he sure got lost...).
Lisbon was inhabited since Neolithic times. The first part of the city to be inhabited was the Castle Hill, which seems to have been fortified since pre-roman times. In the first millennium BC, Celtic tribes invaded the region and were known to have traded with the Phoenicians.
Around 139/138 BC the Romans conquered Olisipo and reinforced the city walls to defend from local hostile tribes. The Roman city included a Theatre and the main economic activity was the "garum" (fish sauce) which was exported to all the Empire. By the end of the Roman presence, the city converted to Christianism and the first bishop was St. Gens.
Following the fall of the Roman Empire, the city was invaded by Barbarians and eventually became part of the Visigothic kingdom of Toledo. 
In 711 the Iberian Peninsula was invaded by the Arabs and soon after Lisbon became an Islamic city. It's during this period that São Jorge's Castle is built.
In 1147 the first king of Portugal, D. Afonso Henriques, aided by Northern European crusaders, conquers Lisbon, and the city becomes the capital city of the kingdom of Portugal in 1385, following a succession crisis.
At the beginning of the Age of Discoveries, the royal residence moves from the castle to Terreiro do Paço (now Praça do Comércio). It's during this period that Lisbon becomes one of the most influential and richest cities in Europe. This period saw the rise of the exuberant Manueline style in architecture, which can be appreciated in Belem Tower or the Hieronymites Monastery.
Lisbon was largely destroyed by the Great Earthquake of 1755, giving way to the modern Pombaline city, rebuilt according to principles of modern urbanism, which can be seen downtown.

What to visit in Lisbon (map at the end):




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