* FTSEurofirst 300 index down more than 2 pct
* Volkswagen falls 17 pct as probe spreads
* Miners among top fallers as metals prices plunge
* Outokumpu hit by profit warning
By Atul Prakash and Danilo Masoni
LONDON/MILAN, Sept 22 (Reuters) - European equities fell sharply on Tuesday, with Volkswagen plunging to four-year lows and basic resources firms facing a sell-off after copper prices took a hit on concerns about a global surplus of the industrial metal.
Shares in Volkswagen wiped off more than one-fifth of their value at one point after slumping nearly 19 percent the day before, as an investigation into possible cheating over emissions tests spread to Asia.
Volumes in the stock were three times the 90-day average and the dive dragged lower the whole European auto sector. South Korea said it would investigate three of its diesel models, while U.S. lawmakers also planned to hold a hearing on its emissions from diesel vehicles in coming weeks.
"We would continue to avoid the auto sector as this issue has the potential to roll-on and it's more likely than not to involve more than just one original equipment manufacturing," brokerage Aviate Global wrote in a note.
Volkswagen - Europe's largest car maker - said it would cut its earnings guidance as it sets aside about 6.5 billion euros in the third quarter to cover costs related to the emissions scandal in the United States and other markets.
However, one broker said the scandal could ultimately accelerate potential M&A in the sector as car makers might need to share costs in the light of a possible increase in spending to reduce emissions and recalling costs.
Shares in Volkswagen fell 17.6 percent, while Peugeot in France was down 8 percent and Milan-listed shares in Fiat Chrysler fell 6 percent, while the STOXX Europe 600 Auto index was down 6.7 percent.
The FTSEurofirst 300 index of top European shares was down 2.3 percent, 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.
"Concerns over global growth persist and the cost of restructuring and balance sheet bolstering is finally hitting home," said Mike van Dulken, Head of Research at Accendo Markets.
The STOXX Europe 600 Basic Resources index dropped 4.5 percent, the second largest sectoral faller, dragged down by 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 fell 15.3 percent after Europe's largest stainless steel maker warned its quarterly loss will be deeper than expected, citing weak demand and low nickel prices. The warning dragged down its peers such a its peers Aperam and Acerinox.
Europe bourses in 2015: link.reuters.com/pap87v
Asset performance in 2015: link.reuters.com/gap87v
Today's European research round-up (Editing by Hugh Lawson)