By Avril Ormsby

GLENROTHES, Scotland, Nov 7 (Reuters) - Britain's ruling Labour Party won a surprise election victory in a Scottish town on Friday, a sign Prime Minister Gordon Brown's handling of the financial crisis has revived his political fortunes.
Just months ago, some Labour members openly questioned Brown's leadership after the party scored poorly in local elections and fell 20 points behind the opposition Conservatives in the opinion polls.
But Brown's determined handling of the banking meltdown has cut the Conservative lead to nine points, despite economists warning that Britain is on the brink of recession.
Thursday's vote for a parliamentary seat in Scotland, where Labour's main rival is the pro-independence Scottish National Party (SNP), provided the first firm evidence at the ballot box of a "Brown bounce".
Asked if Labour would now go on to win the next election, due by mid-2010, Brown told a news conference: "The undivided focus of governments and of ministers is on taking people through these difficult times.
"We have got to get the banks resuming their lending, we've got to help people with their gas and electricity bills and we've got to get the rest of the world working with us."
Foreign Secretary David Miliband, who was tipped earlier this year as a potential challenger to Brown, said the result was an endorsement of the prime minister's leadership.
The comfortable margin was a surprise as bookmakers had tipped the SNP, which overturned a huge Labour majority in another parliamentary election in Scotland in July, to win.
The SNP reduced Labour's majority in Glenrothes, a former coal-mining area bordering Brown's own constituency. But it held on to the seat, vacated after the sitting Labour member of parliament died, by more than 6,700 votes.
"With Gordon Brown interest rates are at a record low, helping hard-working families ... With Gordon Brown, Labour has won here in Glenrothes," Labour candidate Lindsay Roy, the head teacher at Brown's old school, said in his victory speech.

Newspapers hailed Brown as "the comeback king" and said the win would silence talk of an internal leadership challenge.
"Against the odds, Brown bounce is back", a headline in the Times said above an analysis which said Labour was back in the race to win the next national election.
"Six weeks ago there were huge questions over whether he would lead Labour into the next election. Now there are none," wrote Philip Webster in the Times.
The election was held on Thursday as the Bank of England slashed British interest rates by 1.5 points to 3 percent, the lowest in more than 50 years, to try to avert a deep recession.
Some commentators predicted that a win in Glenrothes might tempt Brown to call a snap parliamentary election before the economy worsens, although this is unlikely.
"He would be a fool if he did," Professor John Curtice, professor of politics at the University of Strathclyde in Glasgow, told Reuters.
"Until you've got opinion polls which show the Labour party at least five points ahead of the Conservatives you are not even thinking about holding a general election."
The British economy shrank for the first time in 16 years in the third quarter, house prices have fallen by around 15 percent in the last year and businesses are laying off workers.
The International Monetary Fund forecast that Britain would suffer a deeper downturn than leading industrial rivals.
The Conservatives are keen to lay the blame for Britain's economic underperformance at Brown's door: he was in charge of the economy as finance minister for 10 years before becoming prime minister last year.
But polls show voters see Brown as competent to govern in an economic crisis. He has won praise at home and globally for his package of loans and guarantees to prop up the financial sector.

(Additional reporting by Adrian Croft, Tim Castle and Peter Griffiths in London; editing by Jodie Ginsberg and Philippa Fletcher) Keywords: BRITAIN ELECTION/ (avril.ormsby@reuters.com ; +44 207 542 7947; Reuters Messaging: avril.ormsby.reuters.com@reuters.)

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