Mole,
the XML PARSE statement on the mainframe is used to take one long chunk of XML and using the PROCESSING PROCEDURE XXX-PARSE option, performs another section (XXX-PARSE) to obtain the value of the XML tagged fields and place them into variables in your program.
What (I think) you are describing is a sequential input file that contains lines of XML data. If this is the case, you could read each line of the file and run a XML PARSE statement against it and obtain the data you require. Alternative, you could unstring each line of the file using '<' or '>' in order to get your data out.
I've got an example of the PARSE statement on the mainframe if it would be of any help.
Hope this helps.
Marc