(New throughout, updates with U.S. markets, adds analyst

comment)

By Chibuike Oguh

NEW YORK, Feb 21 (Reuters) - Stocks fell 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.

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, moves that have sparked worries among traders.

"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 in Chapel Hill, North Carolina.

"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 fell on losses in industrials, consumer

discretionary and energy stocks. The three main indexes were

also set to end the week lower.

In Europe, shares have been volatile this week ahead of

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

climbed 0.45%, reversing two days of declines and heading

towards a weekly gain.

The Dow dropped 0.85% to 43,799.85, the S&P 500

fell 0.57% to 6,082.56 and the Nasdaq Composite

slid 0.69% to 19,823.69.

MSCI's gauge of stocks across the globe

fell 0.23% to 881.69. The index is down 0.25% for the week.

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

outside Japan jumped 1.45% to its highest since

November 8.