Obviously that was an issue with version 3.0.14. Updated to 3.0.15 and the problem is solved.
In OS X El Capitan I cannot display unicode characters in iTerm2 (Build 3.0.14).
I have set terminal emulation's character encoding to Unicode (UTF-8) in
Preferences > Profiles > Default Profile > Terminal > Terminal emulation
But still I cannot display or paste for instance German umlauts (ä, ö, ü) into the terminal despite the correct setting.
What am I missing?
Apple's Terminal works flawlessly, but I don't want to switch from iTerm2.