The correct answer is A. UP.
When shunting at a station in gradient in 1-260 or steeper, the engine must be on the UP gradient. This is because the UP gradient provides more traction for the engine, which is necessary to move the train. If the engine is on the falling gradient, it will have less traction and may not be able to move the train.
Option B is incorrect because the falling gradient provides less traction for the engine. Option C is incorrect because the engine must be on the UP gradient, not both gradients. Option D is incorrect because the engine must be on the UP gradient.