Database creation error: new encoding (UTF8) is incompatible with the encoding of the template database (SQL_ASCII) HINT: Use the same encoding as in the template database, or use template0 as template. Odoo 10 Ubuntu 16.04

root@server:~# su postgres
postgres@server:~ $ psql -U postgres
psql (9.0.3)
Type "help" for help.

postgres=# update pg_database set datallowconn = TRUE where datname = 'template0';
UPDATE 1
postgres=# \c template0
You are now connected to database "template0".
template0=# update pg_database set datistemplate = FALSE where datname = 'template1';
UPDATE 1
template0=# drop database template1;
DROP DATABASE
template0=# create database template1 with template = template0 encoding = 'UTF8';
CREATE DATABASE
template0=# update pg_database set datistemplate = TRUE where datname = 'template1';
UPDATE 1
template0=# \c template1
You are now connected to database "template1".
template1=# update pg_database set datallowconn = FALSE where datname = 'template0';
UPDATE 1
template1=# Ctrl+Z