Is it legal to use other people's characters ect for making small items for sale?

No there is no way you can use copyrighted characters. But since you would only be working on a very small scale you could use the old trick of renaming them; Mario becomes "Super Plumber" and Harry Potter becomes "Teen Wizard". It would still be technically illegal but it shouldn't be a real problem if you are only selling a few for fun more than profit.