Final Fantasy Tactics Walkthrough

This is a very difficult battle because of the layout of the city and the range of the Archers and Wizards, and the fact that some of the enemy have the high ground over you. Note that Ramza will not stay where you put him on the formation screen, so feel free to add him somewhere out of the way so you can use the spaces in a more useful way.

To prove that, right off the bat, you'll probably get hit with an arrow from the Archer way up on top of the building, but don't worry about him too much, as Delita and Algus will almost certainly go up and take care of them, or at least if you've made them Archers too, they can get in range to do something useful. 

It will save unnecessary damage if you equip them with Move +1 and Battle Boots so they can get across the battlefield faster, regardless of what direction they go.  It will work to your advantage if you bring along at least one Chemist and one Wizard, as well as having people equipped with Item as a secondary skill for emergency healing.

Don't worry too much about the Knight, focus on the Wizards first because they can cause serious damage to multiple targets.  After the Wizards, it's your choice.  The Knight will have the best chance to cause serious damage but the Archers can hit you and run away afterwards, so it's up to you.  Don't be surprised if you lose this battle once or twice before you get the hang of it - it's one of the most difficult in the early stages of the game.

As previously mentioned, it can be very useful to have Archers of your own in this battle; in fact, it can be quite useful to move your guest characters into this role if you can get them enough JP to do so in previous battles. Making them ranged attackers will keep them alive longer, as their AI often will send them directly into harm's way if they are in melee-oriented classes. Keeping as many party members alive as possible in the early stages of this battle will keep the battle under control. If you're having trouble, consider rushing your entire party to the high ground and then back down.

After you win the battle, the party learns that the Marquis was kidnapped by one of the Death Corps' high-ranking officers, Gustav.  Apparently this didn't settle well with Wiegraf, who went off to stop them.  However, because none of this information fixes the fact that the Marquis is still kidnapped, the party's next destination is the Cellar of the Sand Rat in the Zeklaus Desert. This is another chance to use a town to restock, and a wider span that you can run back and forth across for random encounters if you so desire.