[PHPTAL] Getting error on i18n:translate=""

[ATEC Admin]

Hello,

I am trying to translate non-English web site using gettext and 
i18n:translate attribute, but I keep getting unexpected results.

In the template I have this code:

<p i18n:translate="">O nás</p>

which should generate gettext msgid equal to 'O nás', the content of the 
tag. Instead, PHPTAL generates msgid='O nC<195>C<161>s'.

If I set translation key to some ASCII string, translation works fine. 
After hours of frustration, I could not track the problem down.
Could you, please, point me in the right direction. There must be
some obvious thing I am missing.

Best regards,

Juraj