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kringlan mallLooking for the perfect souvenir? Hand-knitted Icelandic wool sweaters are lovely to look at and are guaranteed to keep you warm! One of the best sources is the Handknitting Association of Iceland, with locations on both main shopping streets -- Laugavegur and Skolavordustigur. A third, smaller shop is located inside the Radisson Blu Hotel Saga. Also watch for the whimsical knitted hats that are a local trademark.

Laugavegur and intersecting Skolavordustigur, the main shopping streets, are well worth strolling even if you don't plan on buying anything. The shops display not only the traditional Nordic sweaters but also the modern design that is an increasing influence in Reykjavik. As you browse, don't forget to look toward the water at cross streets for striking views and murals in unexpected places.

Reykjavik's largest shopping center is Kringlan, with more than 180 boutiques and restaurants a few miles outside the city center. You name it -- clothing, jewelry, music, food, souvenirs, art -- and you can probably buy it here.

If you're not a resident of Iceland, you can get a refund of any Value Added Tax (VAT) paid on your purchases while in Iceland. You must spend at least 4,000 ISK (about $35 USD at this writing) and show both the goods and the required documentation when you leave the country. See the Keflavik International Airport website for more details.

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