Control characters in sql statements close db connection

I am using PostgresSQL 7.2.1 and jdbc driver jar pg72jdbc2.jar that I
downloaded from http://jdbc.postgresql.org/.

Below is the select statement that fails:

"SELECT * FROM NEB_IPSNMPDEVICES WHERE NEB_IPSNMPDevices.PHY_ADDRESS =
'^@`^]:u'"

Executing the statement results in:

java.sql.SQLException: ERROR:  Unterminated quoted string

        at org.postgresql.core.QueryExecutor.execute(QueryExecutor.java:94)
        at org.postgresql.Connection.ExecSQL(Connection.java:398)
        at org.postgresql.jdbc2.Statement.execute(Statement.java:130)
        at org.postgresql.jdbc2.Statement.executeQuery(Statement.java:54)
        at
org.postgresql.jdbc2.PreparedStatement.executeQuery(PreparedStatement
.java:99)
        at TestPostgresJDBC.main(TestPostgresJDBC.java:92)

Running this statement also causes the Connection to be closed.

My questions are:
1. Is this expected behavior? I don't expect the connection to be lost.
Ideally, unless there is such data, nothing is returned for this resultset
or an exception is thrown but the connection is kept open.
2. Is there a way to escape such characters. I did not find any
documentation on that.
3. Is this a  jdbc driver issue or the server itself chokes on these
characters? My guess is that the server chokes.
4. Is there any solution for this problem? The application does need to deal
with control characters.

Any help is appreciated.

Vrinda Mushran