Strings are iterable (just like a list).
I'm interpreting that you really want something like:
fd = open(filename,'rU')
chars = []
for line in fd:
for c in line:
chars.append(c)
or
fd = open(filename, 'rU')
chars = []
for line in fd:
chars.extend(line)
or
chars = []
with open(filename, 'rU') as fd:
map(chars.extend, fd)
chars would contain all of the characters in the file.