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There's only one spot in XIST where the default encoding is 
relevant: When you pass a str object to one of the node 
constructors. This str object is converted to unicode using 
the default encoding. So html.p("ö") won't work, unless you 
change the default encoding, but html.p(unicode("ö", "iso-
8859-1")) will, and so will html.p(u"ö") with a proper PEP 263 
encoding declaration at the beginning of the file. If this 
doesn't fix you problem, you can mail me directly.