Using P4Merge to merge XML

There's a tool called Project:Merge that might do a better job of handling XML content, and it integrates with Perforce:

http://www.projectmerge.com/help/en/integratep4v.php

Update: Project:Merge has been renamed to Oso XML Merge and updated since this post was made. The most recent version can be found here.

Assuming that you're using P4V / P4Win, you can change the default diff and merge tools from the Perforce tools to the ones that you prefer. See this page from the P4V manual.