yum troubles with fc2

Hi,
I am a newbie in Linux. I cann't get yum working. When I issue the "yum check-update" command or "yum update" command I get the following text:

[peter@localhost peter]$ yum check-update
Traceback (most recent call last):
 File "/usr/bin/yum", line 30, in ?
   yummain.main(sys.argv[1:])
 File "/usr/share/yum/yummain.py", line 163, in main
   (log, errorlog, filelog, conf, cmds) = parseCmdArgs(args)
 File "/usr/share/yum/yummain.py", line 75, in parseCmdArgs
   conf=yumconf(configfile=yumconffile)
 File "/usr/share/yum/config.py", line 48, in __init__
   self.cfg.read(configfile)
 File "/usr/lib/python2.3/ConfigParser.py", line 263, in read
   self._read(fp, filename)
 File "/usr/lib/python2.3/ConfigParser.py", line 456, in _read
   raise MissingSectionHeaderError(fpname, lineno, `line`)
ConfigParser.MissingSectionHeaderError: File contains no section headers.
file: /etc/yum.conf, line: 1
'\xef\xbb\xbf[main]\n'
[peter@localhost peter]$

It doesn't look good to me. Can anyone help me out?
The content of   /yum/conf:

[main]
cachedir=/var/cache/yum
debuglevel=2
logfile=/var/log/yum.log
pkgpolicy=newest
distroverpkg=redhat-release
tolerant=1
exactarch=1
retries=20

[base]
name=Fedora Core $releasever - $basearch - Base
baseurl=http://download.fedora.redhat.com/pub/fedora/linux/core/$releasever/$basearch/os/

[updates-released]
name=Fedora Core $releasever - $basearch - Released Updates
baseurl=http://download.fedora.redhat.com/pub/fedora/linux/core/updates/$releasever/$basearch/

#[updates-testing]
#name=Fedora Core $releasever - $basearch - Unreleased Updates
#baseurl=http://download.fedora.redhat.com/pub/fedora/linux/core/updates/testing/$releasever/$basearch/

#[development]
#name=Fedora Core $releasever - Development Tree
#baseurl=http://download.fedora.redhat.com/pub/fedora/linux/core/development/$basearch/

[dag] name=Dag RPM Repository for Fedora Core baseurl=http://apt.sw.be/fedora/$releasever/en/$basearch/dag

Peter Lesterhuis.