Magnus, by Sylvie Germain, trans Christine Donougher

Who is Magnus? A teddy-bear, first, with buttercup-yellow eyes; a teddy-bear that smells slightly scorched and belongs to a boy. Franz-Georg Dunkeltal, five at the end of the Second World War, is left with a gap in his memory, the result, he is told, of an unnamed illness. Owing to some feverish confusion, "illness" and "enemy" have merged in his mind, leaving him unsure whether the void is the product of disease or of history. He has another burden to bear: Franz-Georg's father, we learn quite early, was a doctor in the SS who administered Phenol to inmates in the concentration camps.

Once the war is over, when Dr Dunkeltal flees to Mexico and his mother loses her mind, Franz-Georg Dunkeltal becomes Franz Keller and is sent to live with relatives in England; identities, he has learned, can be exchanged like any other commodity, and the past is condemned to oblivion.

"Only his bear Magnus," we are told, "is entitled to retain his original identity." We see life through Franz's perplexed eyes, as he grows up, lives and loves – May, the dark mother-figure, and luscious, golden Peggy. And he will only know he truly loves Peggy when they have, in a splendid scene, declared their undying hatred for one another.

But throughout his life – which will take him to Mexico, California, Vienna, where he will be violently confronted with his family's past, and finally to France, where he will find spiritual solace in the company of a monk wearing a hat full of bees – Franz remains haunted by the hole in his memory. All he can find to fill it is the vivid image of "a woman engulfed... in saffron flames", dating perhaps from the bombing of Hamburg, which may also be the source of Magnus's scorched fur.

In delirium, he seems to speak not German but Icelandic. Is he even who he thinks he is? And why does he finally assume the name of his bear?

Sylvie Germain's melancholy, magical tale is told not in chapters, but in tiny "fragments", the first two of which are missing, interspersed with poems (Celan, Hardy, St-John Perse) and shards of prose (WG Sebald, to whom Germain owes a lot; Aharon Appelfeld; the Mexican novelist Juan Rulfo) that resonate throughout the text. It's a chamber piece, a life compressed, sometimes waywardly mystical (those bees), in places furiously erotic (thistles and peonies will never look quite the same again), and never less than fascinating in its take on history, memory and the Holocaust.

Christine Donougher's poetic prose suggests an uncanny meld of author and translator, and Dedalus demonstrates again its constant capacity to surprise - and the unwisdom of the recent Arts Council cuts to its funding. Incidentally, Magnus won the 2005 Prix Goncourt des Lycéens, voted for by French secondary-school children. A deserving winner, without a doubt, but does it reveal an almost alarming level of literary sophistication on the part of French secondary-schoolchildren?

Shaun Whiteside's latest translation is of Tiziano Scarpa's 'Venice is a Fish' (Serpent's Tail)