diff --git a/idea/src/org/jetbrains/jet/plugin/highlighter/JetColorSettingsPage.java b/idea/src/org/jetbrains/jet/plugin/highlighter/JetColorSettingsPage.java
index f7f9cc2fdc4..8ddad2c864e 100644
--- a/idea/src/org/jetbrains/jet/plugin/highlighter/JetColorSettingsPage.java
+++ b/idea/src/org/jetbrains/jet/plugin/highlighter/JetColorSettingsPage.java
@@ -58,7 +58,7 @@ public class JetColorSettingsPage implements ColorSettingsPage {
                "[<ANNOTATION>Deprecated</ANNOTATION>]\n" +
                "<BUILTIN_ANNOTATION>public</BUILTIN_ANNOTATION> class <CLASS>MyClass</CLASS><<BUILTIN_ANNOTATION>out</BUILTIN_ANNOTATION> <TYPE_PARAMETER>T</TYPE_PARAMETER> : <TRAIT>Iterable</TRAIT><<TYPE_PARAMETER>T</TYPE_PARAMETER>>>(var <INSTANCE_PROPERTY><MUTABLE_VARIABLE>prop1</MUTABLE_VARIABLE></INSTANCE_PROPERTY> : Int) {\n" +
                "    fun <FUNCTION_DECLARATION>foo</FUNCTION_DECLARATION>(<PARAMETER>nullable</PARAMETER> : String?, <PARAMETER>r</PARAMETER> : <TRAIT>Runnable</TRAIT>, <PARAMETER>f</PARAMETER> : () -> Int) {\n" +
-               "        <FUNCTION_CALL><NAMESPACE_FUNCTION_CALL>println</NAMESPACE_FUNCTION_CALL></FUNCTION_CALL>(\"length\\nis ${<PARAMETER>nullable</PARAMETER><SAFE_ACCESS>?.</SAFE_ACCESS><INSTANCE_PROPERTY>length</INSTANCE_PROPERTY>} <INVALID_STRING_ESCAPE>\\e</INVALID_STRING_ESCAPE>\")\n" +
+               "        <FUNCTION_CALL><NAMESPACE_FUNCTION_CALL>println</NAMESPACE_FUNCTION_CALL></FUNCTION_CALL>(\"length\\nis ${<PARAMETER>nullable</PARAMETER><SAFE_ACCESS>?.</SAFE_ACCESS><INSTANCE_PROPERTY>length</INSTANCE_PROPERTY>} <INVALID_STRING_ESCAPE><STRING_ESCAPE>\\e</STRING_ESCAPE></INVALID_STRING_ESCAPE>\")\n" +
                "        val <LOCAL_VARIABLE>ints</LOCAL_VARIABLE> = java.util.<CONSTRUCTOR_CALL>ArrayList</CONSTRUCTOR_CALL><Int?>(2)\n" +
                "        <LOCAL_VARIABLE>ints</LOCAL_VARIABLE>[0] = 102 + <PARAMETER>f</PARAMETER>()\n" +
                "        val <LOCAL_VARIABLE>myFun</LOCAL_VARIABLE> = <FUNCTION_LITERAL_BRACES_AND_ARROW>{</FUNCTION_LITERAL_BRACES_AND_ARROW> <FUNCTION_LITERAL_BRACES_AND_ARROW>-></FUNCTION_LITERAL_BRACES_AND_ARROW> \"\" <FUNCTION_LITERAL_BRACES_AND_ARROW>}</FUNCTION_LITERAL_BRACES_AND_ARROW>\n" +
@@ -107,7 +107,7 @@ public class JetColorSettingsPage implements ColorSettingsPage {
             new AttributesDescriptor(OptionsBundle.message("options.java.attribute.descriptor.number"), JetHighlightingColors.NUMBER),
 
             new AttributesDescriptor(OptionsBundle.message("options.java.attribute.descriptor.string"), JetHighlightingColors.STRING),
-            new AttributesDescriptor(JetBundle.message("options.jet.attribute.descriptor.string.escape"), JetHighlightingColors.VALID_STRING_ESCAPE),
+            new AttributesDescriptor(JetBundle.message("options.jet.attribute.descriptor.string.escape"), JetHighlightingColors.STRING_ESCAPE),
             new AttributesDescriptor(OptionsBundle.message("options.java.attribute.descriptor.invalid.escape.in.string"), JetHighlightingColors.INVALID_STRING_ESCAPE),
 
             new AttributesDescriptor(OptionsBundle.message("options.java.attribute.descriptor.operator.sign"), JetHighlightingColors.OPERATOR_SIGN),
diff --git a/idea/src/org/jetbrains/jet/plugin/highlighter/JetHighlighter.java b/idea/src/org/jetbrains/jet/plugin/highlighter/JetHighlighter.java
index 77f52f5ff7c..fbd81220c7b 100644
--- a/idea/src/org/jetbrains/jet/plugin/highlighter/JetHighlighter.java
+++ b/idea/src/org/jetbrains/jet/plugin/highlighter/JetHighlighter.java
@@ -73,11 +73,11 @@ public class JetHighlighter extends SyntaxHighlighterBase {
         keys.put(JetTokens.OPEN_QUOTE, JetHighlightingColors.STRING);
         keys.put(JetTokens.CLOSING_QUOTE, JetHighlightingColors.STRING);
         keys.put(JetTokens.REGULAR_STRING_PART, JetHighlightingColors.STRING);
-        keys.put(JetTokens.LONG_TEMPLATE_ENTRY_END, JetHighlightingColors.VALID_STRING_ESCAPE);
-        keys.put(JetTokens.LONG_TEMPLATE_ENTRY_START, JetHighlightingColors.VALID_STRING_ESCAPE);
-        keys.put(JetTokens.SHORT_TEMPLATE_ENTRY_START, JetHighlightingColors.VALID_STRING_ESCAPE);
+        keys.put(JetTokens.LONG_TEMPLATE_ENTRY_END, JetHighlightingColors.STRING_ESCAPE);
+        keys.put(JetTokens.LONG_TEMPLATE_ENTRY_START, JetHighlightingColors.STRING_ESCAPE);
+        keys.put(JetTokens.SHORT_TEMPLATE_ENTRY_START, JetHighlightingColors.STRING_ESCAPE);
 
-        keys.put(JetTokens.ESCAPE_SEQUENCE, JetHighlightingColors.VALID_STRING_ESCAPE);
+        keys.put(JetTokens.ESCAPE_SEQUENCE, JetHighlightingColors.STRING_ESCAPE);
 
         keys.put(JetTokens.CHARACTER_LITERAL, JetHighlightingColors.STRING);
 
diff --git a/idea/src/org/jetbrains/jet/plugin/highlighter/JetHighlightingColors.java b/idea/src/org/jetbrains/jet/plugin/highlighter/JetHighlightingColors.java
index 383e8184a8c..3b4ca3e9d0e 100644
--- a/idea/src/org/jetbrains/jet/plugin/highlighter/JetHighlightingColors.java
+++ b/idea/src/org/jetbrains/jet/plugin/highlighter/JetHighlightingColors.java
@@ -46,14 +46,14 @@ public class JetHighlightingColors {
         SyntaxHighlighterColors.STRING.getDefaultAttributes()
     );
 
-    public static final TextAttributesKey VALID_STRING_ESCAPE = TextAttributesKey.createTextAttributesKey(
-        "KOTLIN_VALID_STRING_ESCAPE",
+    public static final TextAttributesKey STRING_ESCAPE = TextAttributesKey.createTextAttributesKey(
+        "KOTLIN_STRING_ESCAPE",
         SyntaxHighlighterColors.VALID_STRING_ESCAPE.getDefaultAttributes()
     );
 
     public static final TextAttributesKey INVALID_STRING_ESCAPE = TextAttributesKey.createTextAttributesKey(
         "KOTLIN_INVALID_STRING_ESCAPE",
-        SyntaxHighlighterColors.INVALID_STRING_ESCAPE.getDefaultAttributes()
+        new TextAttributes(null, HighlighterColors.BAD_CHARACTER.getDefaultAttributes().getBackgroundColor(), Color.RED, EffectType.WAVE_UNDERSCORE, 0)
     );
 
     public static final TextAttributesKey OPERATOR_SIGN = TextAttributesKey.createTextAttributesKey(
diff --git a/idea/src/org/jetbrains/jet/plugin/highlighter/JetPsiChecker.java b/idea/src/org/jetbrains/jet/plugin/highlighter/JetPsiChecker.java
index 24f14ae7c85..b44a532d3c7 100644
--- a/idea/src/org/jetbrains/jet/plugin/highlighter/JetPsiChecker.java
+++ b/idea/src/org/jetbrains/jet/plugin/highlighter/JetPsiChecker.java
@@ -172,9 +172,11 @@ public class JetPsiChecker implements Annotator {
 
             if (diagnostic.getFactory() == Errors.ILLEGAL_ESCAPE_SEQUENCE) {
                 for (TextRange textRange : diagnostic.getTextRanges()) {
-                    Annotation annotation = holder.createErrorAnnotation(textRange, diagnostic.getMessage());
+                    Annotation annotation = holder.createErrorAnnotation(textRange, getMessage(diagnostic));
                     annotation.setTextAttributes(JetHighlightingColors.INVALID_STRING_ESCAPE);
+                    //annotation.setEnforcedTextAttributes(TextAttributes.merge(JetHighlightingColors.INVALID_STRING_ESCAPE.getDefaultAttributes(), annotation.getTextAttributes().getDefaultAttributes()));
                 }
+                return;
             }
 
             if (diagnostic instanceof RedeclarationDiagnostic) {