Don't use readlines, as has been suggested in other answers. It is slow
Instead, do this:
with open('test2.txt') as f:
for line in f:
print line
The advantage here is that you are not reading the entire file into memory first and then processing. Additionally, by using the with, your fill will be automatically closed when you leave that block.
If you need to make your file into a list (as readlines does), then make that explicit.
with open('foo.txt') as f:
lines = list(f)
Now lines is a list that you can iterate over multiple times.
for line in lines:
print line
for line in lines:
print "Loop 2 - %s" % (line)