diff -r 8ecd1a1c7dfc Doc/c-api/veryhigh.rst
--- a/Doc/c-api/veryhigh.rst	Sun Mar 11 19:21:07 2012 +0200
+++ b/Doc/c-api/veryhigh.rst	Sun Mar 11 11:26:27 2012 -0700
@@ -147,7 +147,8 @@
    Read and execute statements from a file associated with an interactive device
    until EOF is reached.  The user will be prompted using ``sys.ps1`` and
    ``sys.ps2``.  *filename* is decoded from the filesystem encoding
-   (:func:`sys.getfilesystemencoding`).  Returns ``0`` at EOF.
+   (:func:`sys.getfilesystemencoding`).  Returns ``0`` if EOF is reached, or the
+   return value from `PyRun_InteractiveOneFlags` if an error occurs.
 
 
 .. c:function:: struct _node* PyParser_SimpleParseString(const char *str, int start)
diff -r 8ecd1a1c7dfc Misc/NEWS
--- a/Misc/NEWS	Sun Mar 11 19:21:07 2012 +0200
+++ b/Misc/NEWS	Sun Mar 11 11:26:27 2012 -0700
@@ -10,6 +10,9 @@
 Core and Builtins
 -----------------
 
+- Issue #8070: Make PyRun_InteractiveLoopFlags() return an error if
+  PyRun_InteractiveRunFlags(), rather than entering an infinite loop.
+
 - Issue #1469629: Allow cycles through an object's __dict__ slot to be
   collected. (For example if ``x.__dict__ is x``).
 
diff -r 8ecd1a1c7dfc Python/pythonrun.c
--- a/Python/pythonrun.c	Sun Mar 11 19:21:07 2012 +0200
+++ b/Python/pythonrun.c	Sun Mar 11 11:26:27 2012 -0700
@@ -1107,10 +1107,8 @@
         PRINT_TOTAL_REFS();
         if (ret == E_EOF)
             return 0;
-        /*
-        if (ret == E_NOMEM)
-            return -1;
-        */
+        else if (ret != 0)
+            return ret;
     }
 }
 
@@ -1151,12 +1149,14 @@
     if (fp == stdin) {
         /* Fetch encoding from sys.stdin */
         v = PySys_GetObject("stdin");
-        if (v == NULL || v == Py_None)
-            return -1;
-        oenc = _PyObject_GetAttrId(v, &PyId_encoding);
-        if (!oenc)
-            return -1;
-        enc = _PyUnicode_AsString(oenc);
+        if (v == NULL || v == Py_None) 
+            enc = Py_FileSystemDefaultEncoding;
+        else {
+            oenc = _PyObject_GetAttrId(v, &PyId_encoding);
+            if (!oenc)
+                return -1;
+            enc = _PyUnicode_AsString(oenc);
+        }
         if (enc == NULL)
             return -1;
     }