Note: There is a Djinn in vault in the trees. It may look like there's a way to get this Djinn, but there is no way (at this time.) Keep playing the game until you finally come to Vault...Again where you will have the skills necessary to get this Djinn.
The first thing that you want to do in any town is head to the inn. Here, for a small fee, you can get all of your characters' health and psynergy points completely restored. Next, head to the weapons shop in the northeastern part of town and buy the best weapons and armor upgrades that are available (you'll want to do this routine at every town.) Now it's time to find Ivan, the one that Master Hammet said lost his rod. Head to the house on the hill in the northwest part of the town. In the northwest corner of the house stands Ivan. Talk with him and he'll start to read your mind. You tell him about psynergy and the works, and decide that you can use his Mind Read to find who stole the rod. Ivan will then join your party, and you're off to the inn in the south part of town. If you talk with the people in the downstairs floor of the inn you'll discover that the two people upstairs were gone during volcanic eruption at the Sol Sanctum. So, head upstairs to find the two men with incredibly bad Beatles-esque haircuts. They'll be scared of you, and no matter how hard you try you won't be able to corner one of them to mind read them. So, leave the room and Ivan will suggest that you split up to corner them. You and Ivan will now easily corner one of them and he'll read the criminal's mind. You end up outside of their room and Ivan concludes that the people upstairs are the criminals. He also reveals that the stolen goods are somewhere in the inn. Head outside the inn and climb up the ladder going up to the roof of the inn. Walk over the hole in the roof to fall into the hidden cellar where the criminals are hiding the stolen goods! Use your psynergy to move the large box blocking the door, then jump across the gap and go into the room. Talk to the kid tied up to have the three bandits come in and start talking about Lupna. To keep you from "ratting" them out, the criminals attack you. Get ready for your first boss fight of the game!
These guys are very easy to beat. Have Ivan and Garret use their Psynergy on them, while Isaac uses Flint's attack and the Mercury Summon them. You shouldn't even have to use any health boosting substances to defeat these easy evil do-ers. Now the mayor will come and get back his stolen Precious Urn. Ivan also finds Master Hammet's stolen rod in one of the chests. Climb back out of the cellar and head back to the house where you found Ivan at (it's in the Northwestern part of town up on a hill.) The Mayor will give you some Water of Life that can revive a downed character. Before you leave town, stop back at the inn to get your HP and PP recovered once more.