* Pan-European FTSEurofirst 300 index down 3.3 pct
* Volkswagen wipes off one third of value in 2 days
* Miners among top fallers as copper prices plunge
* Outokumpu drops 24 pct after profit warning
By Danilo Masoni
MILAN, Sept 22 (Reuters) - European bourses fell sharply on Tuesday on concerns over the global economy, with Volkswagen plunging to four-year lows and dragging down the whole auto sector as investors gauged the implications of an emissions scandal.
Shares in Europe's largest car maker, which fell almost 20 percent on Monday after it admitted cheating in U.S. emissions tests, declined another 19 percent in heavy trading as investigations spread to Asia and Europe.
"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 manufacturer," brokerage Aviate Global wrote in a note.
Volkswagen said it would cut its earnings guidance and set 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. It said the amount could still change as the investigation unfolds.
One broker said the case 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 on recall costs.
Volkswagen's two-day share drop wiped off around one third its value. Peugeot in France fell 8.8 percent, Daimler lost 7 percent, and Milan-listed shares in Fiat Chrysler declined 6.2 percent. The STOXX Europe 600 Auto index ended down 7.6 percent.
The pan-European FTSEurofirst 300 index fell 3.3 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 Accendo Markets head of research Mike van Dulken.
Basic resources firms ended sharply lower after copper prices fell to three-week lows on concerns about a global surplus of the industrial metal.
The STOXX Europe 600 Basic Resources index was the second largest sectoral faller with a 5.2 percent decline, dragged down by Glencore, Antofagasta, Anglo American and BHP Billiton.
"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 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 also fallen sharply.
Outokumpu fell 24.4 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 peers such as 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 (Additional reporting by Atul Prakash in London; Editing by Catherine Evans)