PORTUGUESE OUTPOSTS: Last orders in the Vegas of the east

At midnight tomorrow, Hong Kong's younger - and wilder - sister will be handed back to China. For the locals it's another excuse to party

Thanks to an earlier accident with a contact lens, everything is a one-eyed blur; but the sensory input is still high. The flashing lights are saying nightclub, my watch says 4am, the music ram-raiding its way into my ears is Cantonese techno, and the chilli crab claw in my hand is the hottest thing I've ever tasted. Just another night out in Macau.

Macau's been pretty lively ever since the Portuguese sailed into A-Ma- Gao, or the Bay of A-Ma (Taoist goddess of seafarers) in the early 1500s. First there were tussles with the Chinese, then several attempted invasions by the Dutch. Pirates apparently lurked in the coves of Coloane, one of Macau's two island offshoots, until as recently as 1910, when the locals finally kicked them out - a victory that is commemorated by a fine memorial in front of the ravishing Chapel of St Francis Xavier in Coloane village.

Macau returns to Chinese rule tomorrow night, but no one seems that fussed. A century ago, it conceded its economic crown to Hong Kong, but the territory's main concern seems to be not business, but partying. From the 19th-century pleasures of opium, prostitution and gambling, which drew in Canton's taipans or "great traders", to present-day temptations - which still include prostitution and gambling - Macau is a kind of oriental Vegas. Eight casinos, a racecourse and a Canidrome ("the dogs" to you or I) battle to relieve you of your money, while the authorities try desperately to play up the many other delights of the place.

The Lisboa is the largest of the casinos. This giant neon palace heaves with punters feeding the "hungry tigers" (slot machines), or trying to guess the total value of three hidden dice at dai-sui ("big-small"), the low-rollers' favourite throughout Macau.

I preferred the sleazy ambience of the Floating Casino (no one uses its official name, Casino Macau Palace), an old boat moored by a down- at-heel quayside at the end of Macau's main avenue, Avenida Almeida Ribeiro. The wan lighting and threadbare interior are complemented by what must be some of the world's cheeriest hookers lined up on its quayside approach. Chirping "hello, hello, hello," like songbirds as you approach, they dissolve into giggles as you pass, as if they can't believe you'd really rather lose out to Lady Luck at the casino rather than get lucky with them.

But Macau's brightest pleasures are simply its wonderful juxtapositions. Mediterranean-style buildings as gaudily coloured as a confectioners' window (and there are some great confectioners round these parts) mingle with serene Buddhist temples, while alleyways so Oriental that they stood in for old Shanghai in the filming of Indiana Jones and the Temple of Doom lead you towards churches so baroque that you could be in Lisbon.

Stand near the corner of Rua da Palha and look down the street as it winds towards Largo Do Senado - the mosaic-covered central square that's more southern Europe than southern China - and the Orient fills the foreground. Ahead, a Buddhist street shrine sends wisps of incense into the sky while hell money flutters to the right outside a funeral shop, and, to the left, a street food- stall does brisk business in red bean-paste doughnuts.

But turn and face up the hill and the scene becomes strangely European. At the top of a long flight of broad steps, to the left of the Monte Fort (built to a design by Louis XIV's chief engineer), stands Macau's most famous symbol, the surreal ruins of the church of Sao Paulo. The honey- coloured stone glows gently in the sun as its carved 17th-century facade spells out a warning tale of angels and devils, dragons and Portuguese sailing ships. It hardly seems to matter that, thanks to a fire in 1835, there is nothing behind the facade but blue sky and a view of the city.

The air of harmonious cultural fusion that hangs over Macau could be down to good feng shui, but it's more likely just an easygoing open mindedness. In place of the ants'-nest madness of Hong Kong, people here relax, whether dawdling over fried shrimp and vinho verde at Fernando's, beside the beautiful black volcanic sands of Hac Sa Beach on Coloane, or just quietly watching the chess-players in Camoes Garden or along the harbour wall.

While I might not have come away with much from the Floating Casino, I did leave Macau with a fortune, courtesy of the I-Ching. Kun Iam is the ancient Buddhist temple where the US signed its first treaty with China in 1844. In its dark interior, I knelt in front of a bright red- and-gold altar, with huge coils of slow-burning incense hanging above me, and shook the fortune sticks until, after a couple of failures, just one came out. At his booth, a wrinkled soothsayer gazed at the slender piece of wood, asked whether the prediction was for myself or another, selected a sheet of paper from the wall behind him, and then quietly discussed my daughter's battle against her troubles.

Reassured, I headed for Rua da Felicidade for an early evening bowl of snake soup. Scattered with raspberry vinegar and flower petals, it was a revelation. Remembering the powdered yam balls I'd acquired rather a taste for in the previous day's Zhen Zhu milk tea, I was up for anything the locals could throw at me - that is, until I caught sight of a water- filled tank full of beetles having a paddle. A queasy enquiry confirmed my worst suspicions. "Sea cockroaches," I was told. "You fry them."

You may need an iron stomach for some of the local food and nerves of steel at the gambling table, but all you really need to enjoy Macau is your eyes and a good pair of shoes.

Portugal, China - who cares? As long as the music plays, the cards turn, the food and drink come, and the colonial buildings glow pastel bright in the sunshine, you can just sit there and wonder why, with Macau so close, anyone bothers with Hong Kong.

Since the abandonment of TAP Air Portugal's Lisbon-Brussels-Macau service, the only direct flight from Europe to the territory is on China Yunnan Airlines from Vienna. A more likely connection is on Eva Airways from Heathrow via Bangkok, for around pounds 600 through a discount agent. Lower fares are generally available to Hong Kong (direct from Heathrow on British Airways, Cathay Pacific and Virgin Atlantic), from which it is an easy crossing by fast ferry to Macau. For further information, contact the Macau Tourist Office on 0171-771 7006

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