Kai Meyer's engaging fantasy portrays Venice as a city alive with wonder--stone lions pad with heavy paws on the canal banks and sometimes fly (as steeds for the Venetian Guard); the canals are full of mermaids with wide shark jaws, and the island city has been under siege by Egypt for 36 years. Only the power of The Flowing Queen, the mysterious spirit of the waters, has kept the city safe. But now the essence of the Queen has been stolen by traitors within the government, and the powers of Hell are offering a blood treaty. Two orphan girls, Merle, 14, and blind Junipa, 13, have become apprentices at the workshop of Arcimboldo, the maker of magic mirrors. He treats them kindly and restores gentle Junipa's sight by replacing her eyes with two round silvery bits of mirror. Merle soon emerges as the more adventurous of the two, and experienced fantasy readers are not surprised when she is given a quest to save the doomed city. American readers of this German bestseller will be reminded of Cornelia Funke's The Thief Lord, by the intriguing mix of actual Venetian locations and a fantasy underworld, and also Neil Gaiman's Coraline, by the matter-of-fact acceptance of grotesqueries. In this unusually short (for fantasy) initial volume, Kai Meyer has planted enough backstory, hints, foreshadowings, and unanswered questions to fuel several sequels. (12 and up) --Patty Campbell