By Ros Krasny
HOLLIS, New Hampshire (Reuters) - The tense campaign between Republican presidential candidates Newt Gingrich and Mitt Romney heated up further on Monday in New Hampshire, where Romney's lead in opinion polls has shrunk in recent weeks.
The frontrunners for the 2012 Republican nomination to challenge Democratic President Barack Obama campaigned near to each other in the Manchester area.
Their biting remarks about one another reflected how New Hampshire - long seen as a lock for Romney, a former Massachusetts governor - now has the look of a competitive primary.
During an interview with Fox News, Romney called for Gingrich, a former speaker of the U.S. House of Representatives, to return $1.6 million in consulting fees he received from the troubled mortgage giants Freddie Mac and Fannie Mae.
Asked about the comment during a campaign stop, Gingrich fired back at Romney.
"If Governor Romney would like to give back all the money he has earned from bankrupting and laying off employees over his years at Bain (Capital), then I would be glad to then listen to him," Gingrich said. "And I bet you $10 - not $10,000 - that he wouldn't take the offer."
The slashing retort was vintage Gingrich, and showed why Romney's campaign has begun only recently to attack Gingrich.
In one comment, Gingrich pecked at Romney's work at the venture capital firm Bain Capital, and at Romney's shaky performance at the Republican candidates' debate on Saturday.
At one point during the debate, Romney offered to bet Texas Governor Rick Perry $10,000 to settle a dispute between the two.
Afterward Romney was battered by analysts who said the comment was a slap at the nation's struggling middle class.
Still in recovery mode on Monday, Romney made a point of answering critics who say he had appeared insensitive to the concerns of many Americans. He also kept up an effort to appear less programmed and more "human."
On Sunday in Hudson, Romney told an anecdote about roughing it in France during his Mormon missionary work in the late 1960s - a topic he has avoided so far this year and during his unsuccessful run for the White House in 2008.
On Monday, Romney made small talk with customers in a Manchester diner, sympathizing with post office worker Bill Charon that "this is a busy time of year for you." He also talked with Charon's mother, Lorraine, about her home mortgage.
Meanwhile Gingrich, never lacking for confidence, urged voters to join his campaign's bandwagon.
"This is the most important election since 1860 ... this is truly an historic moment," Gingrich told workers at Insight Technology, a Londonderry firm that makes components for the military and law enforcement.
"I never ask people to be 'for' me. I ask people to be 'with' me, for the next eight years."
'EVERYTHING'S in PLAY'
Unlike Romney, Gingrich does not have the backing of the political establishment in New Hampshire, which is important in the state-by-state nominating process because its primary is an early gauge of the race.
In late November, however, Gingrich was endorsed by the Union Leader, the only statewide newspaper and a leading conservative voice.
Helped by that and by his momentum elsewhere, Gingrich has pulled to within 10 percentage points of Romney in recent New Hampshire opinion polls.
Asked whether his campaign thinks New Hampshire is in play, a Gingrich aide seemed energized: "A month ago we didn't think that we would be alive. Everything's in play."
Romney acknowledged as much, telling Politico that he considered Gingrich the front-runner in the Republican campaign.
At every campaign stop, Romney highlights his private-sector experience and problem-solving skills with Bain Capital and in running the 2002 Winter Olympics.
He has said that his work at Bain -- which in some cases involved taking over troubled companies, making them smaller through layoffs and other measures and then reselling them -- helped create tens of thousands of jobs "on net."
For Romney, as a former governor of Massachusetts and owner of a lakeside vacation estate in Wolfeboro, New Hampshire is not just a must-win state, it's one he needs to win convincingly.
Many New Hampshire residents see Romney as familiar and reassuring, but Gingrich has turned their heads.
George Louzek came out to an historic drug store in Hollis to see Gingrich.
"I'm trying to make up my mind between Romney and him," said Louzek, 64."Gingrich seems very relaxed, very much at ease either in a political or a casual conversation. But a lot of people in this state favor Romney and know more about him," Louzek said.
(Editing by David Lindsey and Chris Wilson)