utf8 -> utf16 conversion problem ?

Hello all.

I am wondering if anyone can help me with the following little xml/unicode curiosity:

I have a Xerxec-C SAX2 parser parsing an in-memory buffer of xml encoded in utf8.
When reading the sequence C3 AA (which is 'e' with upper circumflux) the characters() method 
receives 00 c3 00 aa , which is wrong ! 
The right value of  'e' with upper circumflux in UTF16 is 00EA.

What is going on ?
Thanks to anyone who can enlight me on this one.

Alex.

p.s. The code I am using looks like so:
  someFunction(char *xml, int32_t xml_len) {
  SAX2XMLReader* parser = XMLReaderFactory::createXMLReader();
  //ExtractHandler is derived from ContentHandler and ErrorHandler
  ExtractHandler extHandler(xml, xml_len);
  parser->setContentHandler(&extHandler);
  parser->setErrorHandler(&extHandler);
  MemBufInputSource mbis((XMLByte*)xml, xml_len, "", false);
  mbis.setCopyBufToStream(false); //not necessary to duplicate the buffer
  parser->parse(mbis);
}