Extended display and extended ascii characters

Linux ...... 2.2.19pre17 #1 Tue Mar 13 22:37:59 EST 2001 i586 unknown
PostgreSQL 7.2.1 on i686-pc-linux-gnu, compiled by GCC 2.95.4
$ /usr/lib/postgresql/bin/pg_controldata /var/lib/postgres/data
[cut]
LC_COLLATE:                           it_IT
LC_CTYPE:                             it_IT



I created a table (bibl) from the following txt file containing extended
ascii chars (environment Latin1). If I do a:
=> select * from bibl;
the contents of the table will display all right, but if (in order to
gain scrolling capacity) I try:
=> \x      ## turn expanded display on
=> select * from bibl;
strange characters will appear in place of original accented letters.

TEXT FILE:
---------
autore | titolo | altre_notizie | collana

 TOUTAIN J.                                    | L'économie antique
                                                            | [Pr. acq. FB 377, pc. FB 400]
                                                                             | L'Évolution de l'Humanité. Synthèse
Collect.Dirigée par Henri Beer 
 ZWIRNER Giuseppe                              | Istituzioni di Matematiche per gli studenti delle facoltà di chimica,
agraria,scienze naturali, economia e commercio e statistica. | Parte prima: rist. dell'ottava ediz. riveduta ed
ampliatacon numerosi esercizi e problemi risolti e proposti. 1973. Parte sec. 4^ ed.  |  
 BARRATT BROWN Michael                         | Storia economica dell'imperialismo
                                                            | Tit. or. «After Imperialism» (1970). Tr. di Mirella
Miotti.Edizione italiana a cura di Alberto Martinelli. Con 33 tabelle fuori testo. | Storia e classe. 17 
(3 rows)
----------------
AND SOME TECHNICAL INFO:
-----------------------
Linux ...... 2.2.19pre17 #1 Tue Mar 13 22:37:59 EST 2001 i586 unknown
PostgreSQL 7.2.1 on i686-pc-linux-gnu, compiled by GCC 2.95.4
$ /usr/lib/postgresql/bin/pg_controldata /var/lib/postgres/data
[cut]
LC_COLLATE:                           it_IT
LC_CTYPE:                             it_IT
-----------------------
Please also note that:
If I read the text file with 'less' or 'vim' the accented letters will
display well; whereas hexediting it, they are displayed as '.'s.

                ~~~~~~~
Could any of you explain what is causing the mess?
Thanks for the attention.
    Ennio.