Yes, it was the terminal setting. Changing vt100 to xterm shows characters fine. Now, how do I replace accented characters with ascii? E.g. ó to o. I tried the following, but it did not work: 
$city = "Sprîngfíèld";
use utf8;
utf8::upgrade($city);
utf8::encode($city);
print $city;

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In reply to Re^2: accented characters are garbled by spspspsp
in thread accented characters are garbled by spspspsp

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