* FTSEurofirst 300, Euro STOXX 50 both down around 2 pct
* FTSEurofirst at risk of worst month since 2002
* Stocks to be higher in 3 months -M.Stanley
* Paddy Power surges on Betfair merger plan
* Europe bourses in 2015: link.reuters.com/pap87v
* Asset performance in 2015: link.reuters.com/gap87v
By Sudip Kar-Gupta
LONDON, Aug 26 (Reuters) - European shares fell on Wednesday, tracking declines in other markets as concerns about China’s economy persisted, with bank and mining stocks lagging.
The pan-European FTSEurofirst 300 index, which rose 4.3 percent on Tuesday, fell 2 percent, as did the euro zone’s blue-chip Euro STOXX 50 index.
Germany’s DAX weakened by 1.6 percent, leaving it some 20 percent below a record high reached in April.
A rare bright spot was betting firm Paddy Power which surged 20 percent as investors welcomed its plans to merge with Betfair.
The FTSEurofirst, which risks posting its biggest monthly loss since 2002, suffered its worst one-day drop since November 2008 on Monday. It rallied back on Tuesday after a Chinese interest rate cut boosted markets.
But many investors remain worried by signs of a Chinese economic slowdown and deflationary pressures resulting from Beijing’s devaluation of its yuan currency earlier in August.
“I think the downtrend is still intact because of the bigger picture of anaemic global economic growth. Any reasonable rally on the markets will be sold into,” said Berkeley Futures’ associate director Richard Griffiths.
Miners fell sharply again, with the price of copper dropping due to the prospect of slowing demand in China, which is the world’s biggest metals consumer, while banks fell due to their exposure to the stock market sell-off.
Some brokers and fund managers are arguing for a European stock market recovery as signs of an economic pickup in the United States and Europe help to offset the weakness in China.
Morgan Stanley’s strategists expected the market to be higher in three months, time.
They tipped 20 shares they considered to be “oversold”, including chipmaker ARM, carmaker BMW and luxury goods group LVMH - all of which have been hit by the Chinese market turmoil.
Heather Miner, head of strategic advisory solutions at Goldman Sachs Asset Management, said stock market volatility could continue in the near term though a broader global economic recovery was intact.
Today’s European research round-up
editing by John Stonestreet