NASHUA – Sen. John McCain, campaigning yesterday with his wife, Cindy, was upbeat despite his fourth-place finish in Thursday's Iowa caucuses.

McCain's good mood was largely due to the second-place finish of his main Republican rival in next Tuesday's primary, former Massachusetts Gov. Mitt Romney.

McCain was not expected to win in Iowa, but Romney had been leading in polls there for months, only to see the lead evaporate in the face of a late surge by former Gov. Mike Huckabee of Arkansas.

McCain told employees at BAE Systems that Romney's loss was due to his negative campaigning.

"People are not going to be fooled by negative campaigns," he said, responding to a question about whether he supported amnesty for illegal immigrants.

Romney has been running ads suggesting McCain supports amnesty because of his earlier support for a bipartisan immigration bill. McCain said yesterday he has never supported amnesty.

Most of McCain's remarks focused on national security, an area largely seen as his greatest strength because of his own experience as a naval officer and as a prisoner of war in Vietnam.

For months McCain shared the national security spotlight with fellow Republican candidate Mayor Rudy Giuliani, but while Giuliani has faded from contention in New Hampshire, McCain has increased in popularity in recent weeks.

While saying things are still tough in Iraq, McCain said they are getting better, thanks to a troop surge. When asked to say when a troop pullout would be possible, McCain said he could foresee the United States with a prolonged presence in Iraq, similar to the way troops are stationed in South Korea, Kuwait and Bosnia.

The price of oil rising over $100 a barrel is a "compelling argument" for energy independence, he said. The use of nuclear energy would have to play a part in cutting greenhouse gas emissions, he said.

Speaking to a largely receptive audience at BAE, a British-owned defense contractor, McCain praised the men and women he spoke to, saying they are playing a part in protecting the nation.

McCain took a question from the audience asking him to talk about interrogation techniques. The U.S. has to take the moral high ground on this issue, he said.

"Somebody here will say, well, what if that person knows a bomb is going to go off in Los Angeles within an hour and we have to find out that information," he said.

That's "a million to one chance . . . we've watched 24 and Jack Bauer too long," McCain said, admitting he is a big fan of the Fox show.