Ryan McGuire has a nice little post that describes how to enable the 256 colour display capabilities of terminal applications that support it. In short, make sure that an initialisation script like ~/.profile or ~/.bash_profile contains:
export TERM=xterm-256color
To test, execute M-x list-colors-display in emacs.
On MacOS X one will need to install the ncurses package from macports. Unfortunately, the terminal emulator that ships with MacOS X – Apple’s Terminal.app – doesn’t support 256 colours; use iTerm.app instead.
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