UPDATE 2-European stocks rise as oil shares surge, shrug off U.S. inflation worries

* Diageo gains on capital return program

* Oil stocks jump, miners boost UK shares

* Commerzbank jumps after forecast lift
(Adds comments, updates prices throughout)

By Shreyashi Sanyal and Sruthi Shankar

May 12 (Reuters) - European stocks rose on Wednesday, led by
a charge in energy shares as oil prices hit two-year highs,
while strong regional earnings reports and signs of speedy
economic recovery offset concerns about a rapid rise in U.S.
prices.

The pan-European STOXX 600 index rose 0.3% after
falling almost 2% on Tuesday, their worst selloff this year.

The European oil & gas index jumped 2.0%, with
shares of Royal Dutch Shell Plc, BP Plc,
Paris-listed shares of TechnipFMC rising over 3.5%
each.

A jump in crude prices driven by signs of a swift economic
rebound and upbeat forecasts for energy demand also pushed
London's FTSE 100 index up 0.8%.

Data showed Britain's economy grew by a
stronger-than-expected 2.1% in March from February.

Major European bourses also shrugged off a surprisingly
strong read on U.S. inflation which dragged down Wall Street's
main indexes deep in the red.

"In Europe dollar strength has borne down on the euro and
sterling and allowed space for rallies in indices across the
continent," said Chris Beauchamp, chief market analyst at IG.

"Another sign that perhaps European markets are the next
'place to be' for many investors."

Ample liquidity, a global semiconductor shortage and a
recent rally in commodity prices are heightening fears of
inflation as developed economies gradually reopen after
lockdowns imposed to curb coronavirus outbreaks.

Miners provided the biggest boost, with shares of
Glencore, Anglo American and Rio Tinto
gaining about a percent each as commodity prices continued to
rally.

"We have a kind of central bank-sanctioned rally in
commodities because they want the economy to run hot. That is
great for industrials and materials and those stocks will
continue to do well," said Marija Veitmane, senior multi-asset
strategist at State Street Global Markets.

European earnings are now expected to surge 90.2% in the
first quarter, as per Refinitiv IBES data, up from a forecast of
83.1% growth last week.

German lender Commerzbank jumped 8.6% after it
beat expectations for first-quarter profit and raised its
revenue outlook.

Spirits maker Diageo rose 3.4% on restarting its
capital return program, while Amsterdam-based technology
investor Prosus NV gained 2.1%, buoyed by plans to
acquire up to 45.4% of shares in its parent Naspers.

French video games company Ubisoft fell 11.1%
after it warned that operating profit might fall this financial
year.
(Reporting by Shreyashi Sanyal and Sruthi Shankar in Bengaluru;
Editing by Anil D'Silva and Mark Heinrich)