Floor coverings I placed around old city for festival (7)
I believe the answer is:
matsuri
'festival' is the definition.
I don't know anything about this answer so I can't tell whether this works.
'floor coverings i placed around old city' is the wordplay.
'floor coverings' becomes 'mats' (mat is a kind of floor covering).
'placed around' indicates putting letters inside.
'old city' becomes 'ur' (ancient Sumerian city state).
'mats'+'i'='matsi'
'matsi' placed around 'ur' is 'MATSURI'.
'for' acts as a link.
Can you help me to learn more?
(Other definitions for matsuri that I've seen before include "Japanese Shinto festival; a truism (anag.)" , "Shinto rite" .)