Encoding in XML

I was working with an XML file that contains some
German characters. If I just create a default XML file
it is giving error in IE. If I setup encoding=UTF-8,
it is working fine 

I did a google and came to know that different
encoding exists like UTF-8, UTF-16 etc. Can somebody
point out all the encodings that are valid and how
they work?

What encoding is universal and can show any
characters?

Thanks in advance. 

Karam

__________________________________
Do you Yahoo!?
Free Pop-Up Blocker - Get it now
http://companion.yahoo.com/