* FTSEurofirst 300 drops 1.9 pct
* Index risks biggest monthly fall since 2008
* Paddy Power surges on Betfair merger plan
* Europe bourses in 2015: link.reuters.com/pap87v
* Asset performance in 2015: link.reuters.com/gap87v (Recasts, adds closing prices)
By Sudip Kar-Gupta and Alistair Smout
LONDON, Aug 26 (Reuters) - European shares ended nearly two percent lower on Wednesday after a volatile session, hit by a late drop in Syngenta after Monsanto dropped its offer for the company.
Stocks remain highly sensitive to fears over Chinese growth which have wreaked havoc in markets for days, but benchmark indexes closed above session lows on an early Wall Street rally and hopes of monetary stimulus from the European Central Bank.
Syngenta fell 18.2 percent after U.S. agribusiness leader Monsanto gave up trying to buy it.
The Swiss company was the top faller on the FTSEurofirst 300 index and in the STOXX 600 Chemicals sector, which fell 3.4 percent.
Basic resources stocks closed down 2.6 percent as copper fell nearly 3 percent.
The pan-European FTSEurofirst 300 index was down 1.9 percent at 1,380.88 by the close, having fallen as much as 2.8 percent, buoyed somewhat by a strong start to trading on Wall Street.
Stocks were also supported after an ECB official said that commodity price falls put the bank's inflation target at risk, and that it was ready to act if needed.
The FTSEurofirst, which risks posting its biggest monthly loss in seven years, suffered its worst one-day drop since November 2008 on Monday, and rallied in the following session after a Chinese interest rate cut boosted markets.
Germany's DAX weakened by 1.3 percent, leaving it some 20 percent below a record high hit in April.
"At current levels, the stock markets appear to reflect a pronounced global slowdown, particularly in the advanced economies," Amundi Asset Management strategists said in a note.
"This scenario ... does not account for the likely response of economic policy, particularly from central banks."
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 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.
Betting firms Paddy Power and Betfair surged, both rallying about 20 percent as investors welcomed their plans to merge.
Today's European research round-up (Additional reporting by Kit Rees; Editing by Louise Ireland)