The Dark Knight practically must have the Ashura now. With 100 Attack, and its ability to deal extra damage to incessantly-annoying dividing enemies, you'll want it. Everything else is more or less up to your discretion.The armor is nice, and if you don't have the magic spells here by now....how'd you make it this far?
In the northeastern bit of town, you can find an elderly man in the cave behind the waterfall. At the north part of this cave is Shinobi.
If you've been leveling fairly well, you are good to go. Similar to Odin, you can either have your basic, well-rounded team, and through careful management of MP, attacking, and items, survive through the fight.
Alternatively, you can use the four Dragoons strategy discussed earlier (at Odin as well), and if you feel unsafe about healing, have a high-defense White Mage. Finally, the Dark Knights strategy focusing on Souleater can also work to take down Shinobi.
After the fight, you'll obtain the Kiku-ichimonji , a nice Dark Blade for your Dark Knight. As you leave the cave, use the waterway to go along outside and find four chests at the end: Demon Mail , Demon Shield , Blessed Hammer , and a Hi-Potion .
Now, go back and use the northwestern cave.