You need quotes to assign the string:
Code:
c:~$ var1=<default>111</default>
bash: syntax error near unexpected token `111'
Now with quotes and showing a way to parse the value from between the tags
Code:
c:~$ var1='<default>111</default>'
c:~$ var1="${var1#<default>}"
c:~$ var1="${var1%</default>}"
c:~$ echo $var1
111