By John Whitesides, Political Correspondent

BUTTE, Mont., July 4 (Reuters) - Democrat Barack Obama mixed presidential politics with parades and barbecue on U.S. Independence Day on Friday, celebrating his daughter's birthday with a picnic and fireworks in Montana.

Obama, concluding a week-long campaign tour focused on values and patriotism, was cheered by crowds as he watched a holiday parade and threw a picnic for supporters in Butte -- a Democratic bastion in a state that normally votes Republican in White House races.

Obama was joined by his wife Michelle and daughters Sasha and Malia, who was celebrating her 10th birthday.

"I finally told her the truth that all these fireworks and stuff are not just for her," Obama said of Malia, who was serenaded with "Happy Birthday" by crowds at the parade and the picnic.

Obama and his family sat in bleachers and watched passing floats and trucks for about an hour in the broiling sun. He apologized for not walking in the parade, a tradition for most U.S. politicians, and blamed his Secret Service protection.

"This is the first parade where I haven't walked. The problem is if we start walking the Secret Service was going to have everybody put their hands up the whole parade route," he said. "We decided that wasn't gonna be much fun for everybody."

Obama later walked along the parade route for about 25 minutes anyway, shaking hands, holding babies -- at one point he took two at a time -- and wishing supporters a happy 4th of July.

"Can't wait for the inaugural parade," Linda Beischel of Helena, who drove to Butte to see Obama, told the Illinois senator.

"It will be fun," Obama replied.

Obama will face Republican John McCain in November's presidential election. McCain took the day off.

Obama told supporters at a picnic hosted by his campaign later in the day that battling special interests, forging a policy of energy independence and revitalizing the economy were patriotic endeavors.

He praised the U.S. military for its work in Iraq and Afghanistan and said improving treatment for veterans would be a priority.

"That's how we show, on this 4th of July, our patriotism," he said. (Editing by Alan Elsner) (For more about the U.S. political campaign, visit Reuters "Tales from the Trail: 2008" online at http://blogs.reuters.com/trail08/)

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