UPDATE 2-Energy, mining stocks lift FTSE 100 as business activity jumps

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* UK inflation falls to 0.4% in Feb from 0.7% in Jan
* UK companies report surge in new orders in March
* FTSE 100 up 0.2%, FTSE 250 adds 0.3%

(Updates to close)
By Shivani Kumaresan and Amal S
March 24 (Reuters) - Energy and mining stocks lifted UK
shares on Wednesday as data showed a better-than-expected
rebound in British business activity in March, although gains
were capped by concerns over the economic hit from a jump in
COVID-19 cases across Europe.
The blue-chip FTSE 100 index .FTSE recouped early losses
to end 0.2% higher, with mining stocks including Rio Tinto
RIO.L , Anglo American AAL.L and BHP Group BHPB.L gaining
between 0.5% and 2.3%.
Oil heavyweights BP Plc BP.L and Royal Dutch Shell Plc
RDSa.L gained 2.0% and 1.9%, respectively, helped by a jump in
crude prices. O/R
"A dulling of recovery hopes as Europe tackles a third wave
of coronavirus are a bit of a double-edged sword for the market
as they also seem to have cooled the inflation fears that have
had investors in a tizz," said Russ Mould, director at AJ Bell
investment.
The FTSE 100 has rebounded more than 36% from a
coronavirus-driven crash last year, but the pace of gains has
slowed recently as investors feared a vaccine-led economic
recovery could lead to higher inflation.
Data on Wednesday showed British inflation unexpectedly fell
in February, reflecting the biggest annual drop in clothing
prices since 2009 and cheaper second-hand cars, toys and
computer games, though most economists see sharper price rises
ahead. Meanwhile, data showed a rush of new orders by businesses
anticipating an easing of Britain's lockdown prompted a much
stronger rebound for UK companies than expected in March. The
flash IHS Markit/CIPS UK Composite Purchasing Managers' Index
(PMI) rose to a seven-month high in March. The domestically focused mid-cap FTSE 250 index .FTMC rose
0.3% helped by industrials and consumer discretionary stocks.
Holiday company TUI TUIGn.DE TUIT.L jumped 6.7% as it
said it would shut 48 retail stores across Britain, adding to
the 166 it had closed there during the COVID-19 pandemic.