XML::LibXML seems to be doing strange things to UTF-8 encoded strings.

use strict;
use warnings;
use Encode qw(encode);
use XML::LibXML;

my $uchar = chr(195) . chr(154);
my $xml = '<?xml version="1.0" encoding="UTF-8"?>
<container><node>'
. $uchar . '</node></container>';
output($uchar);
my $dom = XML::LibXML->load_xml(string => $xml);
my $node = $dom->findnodes('/container/node')->to_literal; 
output($node);
my $encoded = encode('UTF-8', $node);
output($encoded);

sub output {
     my $str = shift;
     print "$str\n";
     for (1..length($str)) {
          print ord(substr($str, $_-1)), ': ';
     }
     print "\n";
}
[download]

Some of my output is below. I have removed the lines printing the characters as that would involve more rendering issues.

195: 154:
218:
195: 154:
[download]

My real case is reading files, but I am getting the issue demonstrated in this example. The character I have chosen is one that is causing problems (a U with an acute accent), but other characters are being transformed as well.

Given that the XML is flagged as being UTF-8, I cannot see anything in the docs indicating why this transformation should take place. What have I missed, please?

Regards,

John Davies