GRAZ, AUSTRIA – Graz is one of the most charming places in a country dominated by charming cities and towns.

A city of 250,000 - the second largest in Austria - Graz is located just a few hours from Venice and the Italian influence is seen everywhere here; in how the people dress (far trendier than in either Vienna or Salzburg); and the style of architecture, which reminds a visitor of colourful Tuscan cities.

Small outdoor cafes and bars in the Mehlplatz, a quaint area of the city known to the locals as the Bermuda Triangle ("because," as one local woman told me, "so many people get lost there") are bordered by brightly-painted apartments which almost always feature lovely courtyards. Some have been turned into chic outdoor restaurants serving up local delicacies from this lovely area of Austria known as Styria.

Many famous people have lived in Graz over the centuries, none more famous than former muscleman Arnold Schwarzenegger who was born here before immigrating to America where he muscled his way into U.S. politics as governor of California; and Frank Stronach, the business strongman who left here for Canada where he built the world’s largest auto parts empire now known as Magna International.

Right: The Clock Tower is the city's traditional symbol. Right: Schlossberg Mountain has a great history.

There are plenty of reminders that Stronach and Schwarzenegger here.

The local soccer stadium is named after Arnie and there’s a museum featuring the paraphernalia he once used to transform his body into a business. The main suite at the 5-star Grand Hotel is also named in his honour. The house Arnold was born in has become one of the areas most sought after tourist attractions, much to the chagrin of the people who now occupy the modest residence.

Schwarzenegger made two yearly pilgrimages to Graz while his mother was still alive and the city is still talking about the 50th birthday party he threw himself here when he invited the entire city and a few of his Hollywood friends to help celebrate the occasion.

Stronach started out life in the small nearby community of Weiz and his influence is still very much being felt here - he owns a local auto plant which produces Chrysler products and he once opened a casino and racetrack which baffled most local residents, one of whom admitted: "horse racing is very foreign to Austrians - we don't even know how to place a bet."

Stronach is also president of the Austrian soccer federation and he owns the Vienna team in that league.

Graz's combination of Medieval, Baroque and Italian Renaissance architecture is very pleasing to the eye and the small alleyways that connect major streets to squares like the Mehlplatz make it unique from all other cities in Austria.

Surprisingly, recent modern additions like the futuristic arts museum, the Kunsthaus, and a floating theatre called the Island in the Mur - added to the city's landscape when it was honoured as Europe's Cultural Capital in 2003 - do not look out of place among the city's old red-tiled skyline.

"We like to call it (the Kunsthaus) the friendly alien," a local woman named Suzanne told me as I snapped photographs of the building that looked like a giant blue body organ complete with connecting valves. The Aluminium Island, shaped like a ship, is where local concerts are held. Both buildings are striking contrasts to their ancient architectural neighbours in the city's Old Town, which can best be viewed from Graz's famed fortress.

No matter where you are in Graz, you can see the Clock Tower, the city's traditional symbol and one of the few reminders of the great fortress that once stood here, making this city a seat of power in ancient times.

Napoleon had the fortress demolished but was persuaded to spare the Clock Tower, which sits like a crown atop mighty Schlossberg Mountain. It's been keeping exact time since 1712. One interesting point about the clock is that the hands are reversed.

The nearby Bell Tower is also an interesting structure and its bell, known as Liesl, tolls three times daily, 101 times to remind people that it was cast from 101 cannonballs.

The mighty Schlossberg is a fascinating place to visit - there is an outdoor stage, called the Kasemattenbuhne that comes complete with ancient corporate boxes chiseled into the mountain next to a stone stage where the works of Mozart and Schubert are regularly played. The view of the city and alpine countryside the mountain affords is truly spectacular. During World War II, the residents of Graz dug tunnels into the Schlossberg and used them as air-raid shelters during Allied bombings of the city. The network of tunnels is fascinating and one has been transformed into a nightclub featuring some wonderful acoustics. You can reach the summit of the Schlossberg by walking up a series of stairs on the side of the mountain or by riding a glass elevator inside the mountain that was added just recently. Take my advice and insist on the elevator. There are hundreds of stairs to climb.

The city's main square is called Hauptplatz and it is where much of the action takes place.

Off the square are a series of small streets that lead to quaint local restaurants and bars, where you can enjoy some excellent Styrian foods, most of which come drenched in pumpkin seed oil - the local treat that makes offerings taste that much better.

Off to one side of the square, visitors can't help but notice some unique narrow buildings.

"They are called three window homes," said my new friend Suzanne, who offered to show me what makes Graz so special. "The (multi-level) homes are only 8 metres wide - room for only three windows. They were very popular in ancient times when everyone wanted to live near the town square."

Just down the street from the main square is the city's famous armoury, called the Landeszeughaus. There you will find over 30,000 pieces of perfectly preserved ancient weaponry, the largest collection of its kind in the world. Stepping inside this museum is like stepping back into medieval times when soldiers and their steeds wore steel battle dress.

Graz is a city of churches - there are 50 Catholic churches alone - and universities and colleges. There are almost 40,000 young people attending school here and their presence gives the old town a youthful feel.

The Mur River flows through Graz and once separated the city's elite and artisans. But bridges now connect all facets of Graz society. Some of the buildings that line the river date back to the time when Graz was an Imperial city and some contain priceless frescos that are in danger of being lost forever because "there are so many the city just does not have the money to repair them all," according to Suzanne. What a shame.

Graz's imperial past is evident everywhere - especially at the city's marvellous cathedral, completed in 1464 by order of Emperor Frederick III and where you will now find some of the country's greatest religious treasures, like the two beautiful ivory bridal boxes that contain the bones of holy people (Crusaders) taken from the catacombs of Rome.

Opposite the cathedral is the ornate mausoleum of Emperor Ferdinand II, who was born in Graz and ordered that he be buried here.

The walk back down from the cathedral takes you through the old town where you will find the city's revered Opera House, a house containing the world's only double spiral staircase; lots of colourful old buildings where young people sit sipping coffee on leather chairs; and the local outdoor market, where farmers and vendors sell their wares every day.

Sooner or later you will find yourself back in the "Bermuda Triangle" so make sure you pull up a chair at one of the outdoor cafes in Glockenspielplatz around 11 a.m., 3 p.m. or 6 p.m., to witness the performance of the Glockenspiel - the clock that features two wooden figures dressed in traditional costumes who emerge and spin for the tourists.

It's a great way to terminate your visit in the city where the Terminator comes from.