Jan 23 (Reuters) - European shares finished lower on Friday and logged weekly losses as investors exercised caution and assessed any potential trade jitters resulting from frictions with the U.S. over Greenland.

The pan-European STOXX 600 slipped 0.1% to 608.34 points, snapping a five-week winning run - its longest since May. Despite a mid-week rebound, the index closed 1.1% lower for the week as investor sentiment was dampened by flaring geopolitical uncertainties.

"We've seen a general increase in uncertainty this year. Even if the Greenland issue seems resolved for now, investors are holding back because they're worried that it could come up again," said Michael Field, chief European equity strategist at Morningstar.

Global markets were shaken this week after U.S. President Donald Trump's latest set of threats to implement progressively increasing tariffs on eight European national until Washington was allowed to buy Greenland. Though he walked back on the threat, citing an agreement with NATO, investors remain vigilant of tariffs being used as a bargaining tool.

The uncertainty had big northern European investors view holding U.S. assets, especially Treasuries, cautiously, Reuters reported.

On the equities front, however, Lale Akoner, global market analyst at eToro, said "it doesn't necessarily mean that they are wasting away from all U.S. assets period. I still do believe that, you know, the United States has an index comprised of the highest quality companies around the world."

Still, the STOXX 600 has outperformed the U.S. S&P 500 so far this year as much of the action was in Wall Street's small caps.

Meanwhile, the STOXX insurance sector led broader sectors lower with a 1.6% fall, set against a selloff in longer-dated European bonds. [EUR/GVD]

Investor nervousness was still reflected in elevated commodities prices. Energy and mining stocks gained 1.5% each, helping limit losses on the STOXX index. 

The defence stocks also jumped 1.5%, after a steep fall the session prior.

On the data front,  a survey showed that euro zone business activity expanded more slowly than expected this month on weaker growth in the dominant services industry.

Among others, Ericsson advanced 10.5% after the Swedish telecoms gear maker's fourth-quarterly profit beat expectations and announced a share buyback programme.

Adidas fell 5.7% after brokerage RBC downgraded the sportswear maker on elevated consensus estimates. Rival Puma also slid 14.1%.

BASF dropped 1% after preliminary figures showed the German chemical giant's profit fell in 2025 due to lower margins and negative currency effects.

(Reporting by Niket Nishant, Avinash P and Johann M Cherian in Bengaluru; Editing by Sherry Jacob-Phillips and Shilpi Majumdar)

By Niket Nishant and Avinash P