generating xml with chars like (õäöü)

Hi

I found another problem in that kind of situation. Now when i create xml 
data with DOM, I have character ecoding problem.
Right now my xml starts like so:
<?xml version="1.0" encoding="ISO-8859-1"?>

But i must use estonian language characters like: õ ä ö ü
So i think UTF-8 charset should do fine here but xml DOM had some kind 
of problems when encoding was utf-8.

So what do u suggest me to do. Use some kind of encoding or maybe use 
somekind of character converting functions in PHP to read/write xml files?


PS. and still my xml data comes in one line:(