(Adds closing prices)
* FTSEurofirst 300 index closes flat
* Carmaker Volkswagen ends higher in volatile trade
* Airline IAG lead travel stocks higher after upgrade
* Profit warning sends healthcare firm Coloplast down 5 pct
By Danilo Masoni
MILAN, Sept 23 (Reuters) - European stocks closed little changed in volatile trade on Wednesday, with a rebound in automakers led by Volkswagen and gains in travel stocks offset by weaker banks.
Shares in Volkswagen rose 5.19 percent. It had lost about a third of its value in the previous two sessions after the German carmaker got caught up in a scandal that Deutsche Bank called an "investor's nightmare" and which led to the resignation of CEO Martin Winterkorn.
The United States has accused Volkswagen of rigging its cars to conceal their emissions level when the engines were tested.
Traders said Volkswagen's rise, accompanied by other gains by carmakers, were triggered by short covering. They cautioned against taking positions in the stock, whose price swung from an initial fall of nearly 10 percent to a gain of almost 9 percent.
One trader said talk of a potential takeover by Fiat Chrysler also helped.
The pan-European FTSEurofirst 300 index ended 0.02 percent higher, giving up earlier gains as Wall Street declined. Some investors were taking advantage of recent share price falls and finding value in some stocks. Among national indexes, Germany's DAX rose 0.44 percent while Spain's IBEX fell 0.79 percent.
"Shares in Europe are seeing a partial recovery, but volumes are low as caution remains following last week's uncertain message from the Federal Reserve," said Enrico Vaccari, a fund manager at Italy's Consultinvest. "European markets trade at a discount to the United States and this in the medium term should convince investors to buy."
Travel and leisure shares gained 1 percent, topping sectoral gainers. The London-listed shares in International Airlines Group rose 4.7 percent after Morgan Stanley made the airline operator its overweight pick in the sector, raising its target price and earnings forecasts.
The European oil and gas index rose 0.71 percent, reducing earlier gains as crude prices turned lower on large builds in gasoline that raised concerns about high autumn fuel supplies.
Coloplast fell 4.7 percent after issuing its third profit warning this year. The Danish healthcare product maker has set aside 3 billion Danish crowns for a U.S. lawsuit. .
Banking shares were the lagest sectoral faller with a decline of 0.89 percent.
Europe bourses in 2015: link.reuters.com/pap87v
Asset performance in 2015: link.reuters.com/gap87v
Today's European research round-up
Editing by Catherine Evans