(Updates prices throughout with U.S. markets close)

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Wall Street stocks finish lower

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European stocks gain ahead of Germany elections

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Benchmark 10-year yields down

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Crude prices settled more than 2%

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Gold eases from record high

By Chibuike Oguh

NEW YORK, Feb 21 (Reuters) - Stocks finished lower on

Wall Street but edged higher in Europe on Friday amid

uncertainty about U.S. President Donald Trump's rapid policy

initiatives, including spending cuts and tariffs, and Germany's

upcoming elections. Oil prices settled down more than 2% while

gold eased from record highs.

Trump has announced tariffs on several major U.S. trading

partners since returning to the White House last month and

unleashed a campaign to slash the 2.3 million-strong federal

workforce.

"The sell-off in the last couple of days has really been

about the uncertainty with the pace of change in the

government," said Joshua Wein, portfolio manager at Hennessy

Funds. "We all knew there would be spending cuts and layoffs of

employees, but the pace at which that is happening has given the

market a new type of uncertainty that we haven't seen before."

Data released on Friday showed U.S. business activity tumbled to

a 17-month low, indicating that businesses and consumers were

becoming increasingly rattled by the Trump administration's

policies.

The benchmark S&P 500, Dow Jones Industrial Average and

Nasdaq Composite Index ended down driven by on losses in

industrials, consumer discretionary, technology and energy

stocks. The three main indexes also finished the week lower.

In Europe, shares have been volatile this week ahead of

Germany's election on Sunday. Europe's broad Stoxx 600

climbed 0.52%, reversing two days of declines. It ended the week

up 0.26%.

The Dow dropped 1.69% to 43,428.02, the S&P 500

fell 1.71% to 6,013.13 and the Nasdaq Composite

slid 2.20% to 19,524.01.

MSCI's gauge of stocks across the globe fell

1.03% to 874/59. The index is down 1.09% for the week. Overnight

in Asia, MSCI's broadest index of Asia-Pacific shares outside

Japan jumped 1.35% to its highest since November

8 and gained 1.47% for the week.

Several Federal Reserve officials, including Fed Governor

Adriana Kugler and Atlanta Fed President Raphael Bostic,

signaled on Thursday they still feel that cooling U.S. inflation

will in time allow the central bank to deliver further interest

rate cuts.

The benchmark U.S. 10-year note yield fell 7.2

basis points to 4.427%.

"Ultimately, if you weigh what's been happening in the last

few days, the equity market is pricing in more cuts than the

bond market is," Wein said. "I think short term, it's this

uncertainty but long term, it's the potential for tax cuts, cuts

in regulation and free market forces at work as it pertains to

whatever people care about in the economy."

The dollar advanced against major currencies, partly retracing

losses versus the Japanese yen. The euro stumbled after a series

of business activity surveys showed a sharp contraction in early

February in France and only mild improvement in Germany.

The yen strengthened 0.31% to 149.14 per dollar.

Against the Swiss franc, the dollar strengthened 0.07%

to 0.897.

The dollar index, which measures the greenback

against a basket of currencies including the yen and euro, rose

0.25% to 106.62, with the euro down 0.38% at $1.046.

Oil prices settled down more than 2% on supply disruptions

in Russia, fading Middle East risk premium, while uncertainty

loomed over a potential peace deal in Ukraine.

Brent futures settled down 2.68% to $74.43 a barrel,

while U.S. West Texas Intermediate crude settled down

2.87% to $70.40.

Gold prices eased as investors booked profits from the

previous session's record high. Spot gold fell 0.16% to

$2,934.10 an ounce. U.S. gold futures settled 0.1% lower

at $2,953.20.