European shares end sharply lower dragged by commodity stocks, banks

* FTSEurofirst at lowest since October 2014

* DAX down 24 percent since last year's peak

* Oil prices lose more ground

* Italian banks down on liquidity concerns (Updates with closing prices)

By Sudip Kar-Gupta and Danilo Masoni

LONDON/MILAN, Jan 20 (Reuters) - European stocks dropped on Wednesday as a relentless slide in oil prices hit world markets, with a leading European index falling to a 15-month low.

Concerns about the global economy and weak oil prices are making stocks too risky, several traders and investors said. Others looked to central banks to help calm nerves.

"Stress is high enough to trigger a reaction of monetary authorities to calm down nerves. And (ECB President Mario) Draghi tomorrow can do something," said Giuseppe Sersale, fund manager at Anthilia Capital in Milan. The European Central Bank holds its policy meeting on Thursday.

The pan-European FTSEurofirst 300 index fell 3.3 percent to its lowest level since October 2014. The euro zone's blue-chip Euro STOXX 50 index < .STOXX50E> also fell by a similar amount.

Germany's DAX slid 2.8 percent, leaving the DAX some 24 percent below a record high reached last April (LSE: 0N69.L - news) .

Oil prices lost yet more ground after the International Energy Agency, which advises industrialised countries on energy policy, warned that oil markets could "drown in oversupply" in 2016. In response, European basic resources and energy share indexes slumped to their lowest in more than 12 years..

"I am quite pessimistic about the equity markets for the next two to three months. I do not see a 2008-style scenario, but I do see a bear market coming," said Andreas Clenow, a hedge fund trader and principal at ACIES Asset Management.

Clenow said he had no "long" positions -- bets on future gains -- in European equities at present, although he added that economic stimulus measures from the ECB would provide an element of support.

No sector in Europe made gains. Italian banks led European banking stocks lower after Italy's Monte dei Paschi (Milan: BMPS.MI - news) said some customers had been pulling savings out. Monte Paschi fell 22 percent.

Many investors were wondering about the pace at which people were closing accounts and selling Italian bank bonds, Anthilia Capital (Other OTC: CGHC - news) 's Sersale said. "I wouldn't call it a bank run but definitely outflows," he said.

Zurich fell 10.8 percent after the Swiss insurer launched a profit warning for its general insurance business, its second in four months, raising concerns over its dividend.

ASML Holding (Xetra: A1J4U4 - news) was an outstanding gainer, up 4.6 percent, after stronger than expected quarterly results.

Hantec Markets' analyst Richard Perry said it was too risky to buy into European stocks for now.

"The continued downside in the oil price is just smashing the markets and smashing sentiment," said Perry.

Today's European research round-up (Editing by Richard Balmforth)