How can I get zsh to display international characters properly?

I just started using zsh, and love it. However, I've stumbled upon an annoyance when it comes to international characters:

➜  ~  touch åäö.txt               
➜  ~  ls                          
Desktop       Dropbox       Music         Sites
Documents     Library       Pictures      a??a??o??.txt
Downloads     Movies        Public
➜  ~  rm -v a<030a>a<0308>o<0308>.txt
åäö.txt
➜  ~  

With bash it looks like this (the filename in rm -v is auto completed by pressing TAB in both cases).

johan@retina ~ $ touch åäö.txt
johan@retina ~ $ ls
Desktop       Dropbox       Music         Sites
Documents     Library       Pictures      åäö.txt
Downloads     Movies        Public
johan@retina ~ $ rm -v åäö.txt 
åäö.txt
johan@retina ~ $ 

How can I fix this with zsh?

EDIT:

Setting export LANG=en_US:UTF-8 fixes the output of e.g. ls and also shows it properly on the line below current input when there are multiple matches on TAB-completion. However, selecting the file from TAB-completion it shows the wrong way on the input line, the same goes for when there is only one match.

The above example now looks like this with zsh:

➜  ~  touch åäö.txt               
➜  ~  ls                          
åäö.txy
➜  ~  rm -v a<030a>a<0308>o<0308>.txt
åäö.txt
➜  ~  

If I have two files matching on TAB-completion it looks like this:

➜  ~  touch åäö.txt               
➜  ~  touch öäå.txt                          
➜  ~  rm 
öäå.txt    åäö.txt

Selecting one of the above by pressing TAB again and using arrow keys, or pressing either a or o to only make one match before completion generates this:

➜  ~  rm o<0308>a<0308>a<030a>.txt
➜  ~  rm a<030a>a<0308>o<0308>.txt

Any suggestions on what's wrong?

Thanks @mpy for solving the LANG problem. The answer is to use:

export LANG=en_US.UTF-8

in your .zshrc.

The remaining problem is caused by the completion system. Unfortunately completion is a monster feature. It involves shell functions or perhaps even scripts being called and somewhere in that process possibly LANG is again set to a wrong value. If you have root privileges you can debug this shell script code). Good luck with the completion guide.

Try

1. Having a Powerline compatible font installed https://github.com/powerline/fonts
2. Setting these ENV vars in .zshrc:

LANG="en_US.UTF-8"
LC_COLLATE="en_US.UTF-8"
LC_CTYPE="en_US.UTF-8"
LC_MESSAGES="en_US.UTF-8"
LC_MONETARY="en_US.UTF-8"
LC_NUMERIC="en_US.UTF-8"
LC_TIME="en_US.UTF-8"
LC_ALL="en_US.UTF-8"

I had the same problem in Arch Linux using zsh.

Using bash everything works just fine, but when I switch to zsh some characters were displayed wrong (e.g. ñ,°).

I've added export LANG="en_US.UTF-8" to my .zshrc and nothing happened.

I did everything to set LANG inside zsh and nothing fixes.

Then I changed my shell back to bash with chsh -s /bin/bash and I noticed my env var LANG was wrong with printenv LANG it showed me LANG=C.

This is a new installation so I forget to create /etc/locale.conf file and set my LANG="en_US.UTF-8" and after restarting everything work perfect.

Hope this helps.