open( FH, $file1 ) or die $!;
while( my $line1 = <FH> ) {
  print "$file1: $line";
  open( FH, $file2 ) or die ...;
  while( my $line2 = <FH> ) {
    print "$file2: $line2";
  }
  close( FH );
} # while
close( FH );
<code>
<p>gives you an error because the first <code>close( FH );