XML format-number problems when using separators

<?xml version='1.0' encoding='iso-8859-1'?>

<xsl:stylesheet version="1.0" xmlns:xsl="http://www.w3.org/1999/XSL/Transform"
xmlns:fo="http://www.w3.org/1999/XSL/Format"
xmlns:msxsl="urn:schemas-microsoft-com:xslt"
xmlns:hsi="http://www.myfakecompany.com/fakey"
extension-element-prefixes="msxsl hsi">

    <xsl:decimal-format name="euro"
        decimal-separator=","
        grouping-separator="&#160;"/>

    <xsl:template match="/">

    <xsl:value-of select="format-number(1234567.89, '#&#160;###.##;(#&#160;###.##)', 'euro')"/>

    </xsl:template>
</xsl:stylesheet>

'#&#160;###,##;(#&#160;###,##)'