There's a VERY cool plugin that takes a regular image and turns it into a favicon for your site. It's called Favicon Generator. Very cool. It's what I've used on my blogs for years, and I just added it to my classipress site. Works like a charm.
There's no setting for it as the favicon code is already included in the header. You simply upload/replace the existing favicon in the images folder of classipress with yours.
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