Problems with German special characters

Hi,

I have been fighting for a while now with a problem that the German
special vowls (Umlaute), e.g. üöä get scrambled when read in from file
using IO.readlines. I have played quite some time with various code
pages. But that didn’t fix the problem. I lately realized that those üöä
aren’t even written correctly to the console when starting rails from
the command prompt using ruby script/server, for example:

127.0.0.1 - - [08/Dec/2008:20:22:50 Westeuropõische Normalzeit] "POST
/mypet/d

This should be Westeurop>äõ<ische. Even when I
start up plain Rails those specials vowls get scrambled. Does anybody
have some idea?

Thanks, Oliver