Equip someone with the Dawn Shard and use Decoy magic on him while you take care of the elementals. Then just hit Mateus with thunder magic, thunder elemental weapons, et cetera. He's not that hard. I beat him with a party of level 1, 2, 2, 3, 3 and 3, believe it or not. If you can't, then go to Henne Mines and kill some Jellies with fire magic, unlock some HP augments and level up. Shielded Armor from Bur-Omisace is VERY useful, you should buy 3 of them and equip them.
And you're going to be at ~45 when you get to Balfonheim. At least that's what level I was.