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Rationale: Non-ASCII characters should be avoided in source code but sometimes they are necessary (e.g., a German resource bundle in XML format). I recommend setting the character encoding to UTF-8 for all text files to ease future reuse and cross platform development. AFAIK the default setting in Eclipse on Windows is
Setting text file character encoding for a Eclipse project.
Warning: Java expects simple properties files in ISO 8859-1 character encoding http://docs.oracle.com/javase/6/docs/api/java/util/Properties.html
tested on Eclipse 3.7.1 Classic (Indigo)