escaping an accented character

The character à ('a' with a grave accent) appears in a node in my XML. When 
I use an XSLT to display the node in an href for link in an html page, the 
character gets escaped as %C3%A0, which is completely wrong (it should be 
escaped as %E0). Similar problems occur with all accented characters.
Both the XSL and the XML file have encoding="UTF-8" (unicode, I believe).

Any suggestions?  Thanks.

--Peter 

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