By Stephen Culp

NEW YORK (Reuters) -Wall Street turned lower and gold surged to record highs on Tuesday as Israeli airstrikes on Gaza revived geopolitical jitters and the U.S. Federal Reserve gathered to discuss monetary policy amid growing economic uncertainty.

A vote by Germany's parliament to overhaul government spending sent European stocks higher, however, and German shares to near record highs.

Even so, all three major U.S. stock indexes were lower in early trading, with weakness in tech-related megacap stocks dragging the tech-laden Nasdaq down the most.

A new round of Israeli missile attacks on the Gaza Strip, killing over 400 people, brought Middle East tensions from a simmer to a boil, even as U.S. President Donald Trump and Russian President Vladimir Putin were expected to discuss terms of a potential end to Russia's war on Ukraine.

"There's a lot of turmoil in the world, things can change direction pretty quickly," says Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.

"The markets don't know where tariffs stand; whether they're on, whether they're off... I was more surprised by the rally of the past two days, quite frankly, than I am by the weakness today."

The U.S. Federal Reserve is slated to convene for its two-day monetary policy meeting, which is expected to culminate in the central bank leaving its key interest rate where it is until further inflation progress is made and the effects of the Trump administration's erratic tariff policies are known.

On the economic front, a stronger-than-expected rebound in single family housing starts and robust industrial output data provided a welcome change from generally lackluster recent indicators, providing some reassurance that the U.S. economy is not in danger of imminent recession.

The Dow Jones Industrial Average fell 234.13 points, or 0.56%, to 41,606.96, the S&P 500 slid 59.72 points, or 1.05%, to 5,615.40 and the Nasdaq Composite slipped 324.68 points, or 1.82%, to 17,483.99.

European shares edged higher and German stocks hovered near record highs as its parliament approved a debt reform package to boost Europe's biggest economy.

So far this year, European stocks have outperformed their global counterparts.

Europe's broad FTSEurofirst 300 index rose 10.41 points, or 0.48%.

MSCI's gauge of stocks across the globe fell 4.31 points, or 0.51%, to 839.18.

The pan-European STOXX 600 index rose 0.52%, while emerging market stocks rose 13.09 points, or 1.16%, to 1,144.53.

MSCI's broadest index of Asia-Pacific shares outside Japan closed 1.11% higher at 594.85, while Japan's Nikkei rose 448.90 points, or 1.20%, to 37,845.42.