* FTSEurofirst 300 index down 1.6 pct
* Miners top fallers as metals prices plunge
* Volkswagen falls further as probe spreads
By Atul Prakash
LONDON, Sept 22 (Reuters) - European equities retreated on Tuesday after strong gains in the previous session, with basic resources companies facing a heavy sell-off after copper prices fell sharply on concerns about a global surplus of the industrial metal.
Shares in Volkswagen fell more than 5 percent, after slumping nearly 19 percent in the previous session, after an invesigation into possible cheating over emissions tests spread to Asia.
The STOXX Europe 600 Basic Resources index dropped 4 percent, the top sectoral faller, dragged down by a 3.8 to 9.6 percent fall in Rio Tinto, BHP Billiton, Glencore, Anglo American and Antofagasta .
"It's a continuation of the negative trend for basic resources companies as we have a high degree of uncertainty regarding emerging market economies. We have seen some negative earnings revisions for the sector in the past weeks," Christian Stocker, equity strategist at UniCredit in Munich, said.
"If China manufacturing numbers come in better than expected tomorrow, we could see a rebound in mining stocks for some days, but the sector's medium-term outlook remains bearish."
The European mining index has slumped about 25 percent so far this year mainly on concerns about the pace of economic growth in China, the world's biggest metals consumer. Prices of major industrial metals such as copper, aluminium and nickel have fallen sharply this year.
Outokumpu shares fell 14.5 percent after Europe's largest stainless steel maker warned that its quarterly loss will be deeper than expected, citing weak demand from distributors amid high stock levels and low nickel prices.
The FTSEurofirst 300 index of top European shares was down 1.6 percent at 1,388.52 points, a day after closing 1 percent higher. The benchmark index has been hovering within a 75-point range this month. It broadly traded in a 170-point band in July and August.
Shares in Volkswagen fell 5.5 percent after South Korea said it would investigate three of its diesel models. Lawmakers on a panel in the U.S. House of Representatives also planned to hold a hearing on its emissions from diesel vehicles in coming weeks.
Volkswagen shares plunged 19 percent on Monday after the U.S. Environmental Protection Agency said the world's biggest carmaker by sales used software that deceived regulators measuring toxic emissions and could face penalties of up to $18 billion.
"While there is no doubt that Volkswagen will be able to overcome this in the long-term, the main questions still will have to be answered like how much will be the total monetary cost of the fallout and if VW CEO ( Martin) Winterkorn will be able to hold on to his job," Markus Huber, senior analyst at Peregrine & Black, said.
Europe bourses in 2015: link.reuters.com/pap87v
Asset performance in 2015: link.reuters.com/gap87v
Today's European research round-up