The C locale does not support 8-bit characters (that is, G1 set or right-hand side of the ISO 8859-1 character set, such as characters with diareses). Use the en_US locale to display 8-bit characters in the English language environment.
To empower the en_US locale you can pull down the Workspace Properties menu, under the category "Localization" select en_US.
Alternatively, if you are a Bourne Shell user you can add the following to your ~/.profile file:
LANG=en_US; export LANG
If you are a C-shell user you can add the following to your ~/.login file:
setenv LANG en_US