European shares end lower led by Glencore, Volkswagen

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* FTSEurofirst 300 and Euro STOXX 50 down over 2 pct

* Glencore (Xetra: A1JAGV - news) down almost 30 pct on debt worries

* VW closes below 100 euros for first time in 4 years

* Vodafone down after ending talks with Liberty Global (NasdaqGS: LBTYA - news)

* Spain's IBEX down 1.5 pct after Catalan vote, banks outperform

By Danilo Masoni

LONDON, Sept 28 (Reuters) - European shares closed sharply lower on Monday, with miner Glencore seeing one third of its value wiped out by growing debt concerns and carmaker Volkswagen (Other OTC: VLKAF - news) , which has been hit by an emissions data scandal, extending losses.

The pan-European FTSEurofirst 300 index ended down 2.21 percent, while the euro zone's blue-chip Euro STOXX 50 index fell 2.37 percent, with both markets retreating after rising by around 3 percent on Friday.

European stock markets have steadily lost ground from peaks reached in April (LSE: 0N69.L - news) , partly due to concerns about an economic slowdown in China. The declines have taken the benchmark euro zone index to its lowest since January, sidelining investors confident about Europe's economic recovery.

"In the short term the mood continues to be negative," said JCI Capital Head of Research Nicolo Nunziata. "It (Other OTC: ITGL - news) 's hard to say if markets have structurally changed or if they're going into a phase where higher rates will encourage those who believe economic growth (in Europe) is strong enough."

In a note on Monday, Morgan Stanley (Xetra: 885836 - news) said it had cut to zero its pan-European corporate earnings forecast for 2015, citing greater than expected headwinds from commodity sectors. But, breaking up that figure, it expects UK earnings to fall around 13 percent and euro zone earning growing 11 percent.

Over the weekend International Monetary Fund chief Christine (HKSE: 1210-OL.HK - news) Lagarde said the IMF was likely to revise downwards its estimates for global economic growth due to slower expansions in emerging economies.

Glencore fell 29.4 percent after a bearish Investec (LSE: INVP.L - news) note questioning the mining and trading group's value given its high level of debt and the continued slump in metal prices. The stock marked its worst one-day drop ever.

Volkswagen shares slid 7.46 percent, closing under the 100 euros threshold for the first time in almost four years, as investors tried to assess the financial impact of the emission scandal. VW shares have fallen by more than 30 percent over the last week after the company acknowledged installing software in diesel engines designed to hide their emissions of toxic gases.

Bernstein said the potential fine from the U.S Environmental Protection Agency could probably be worth much less than its worst case scenario of $7.4 billion but cautioned against other risks for the car maker stemming from the emissions affair.

"So we recognize it is prudent to remain extremely wary of VW's situation and brace for significant financial damage," it said. Yet fears are overdone and total damage will probably be less than what it has lost so far in market cap, it added.

Spain's benchmark IBEX index fell 1.32 percent, after Catalan secessionists won a majority of seats in a regional vote, though were not seen to have a clear mandate to push for independence.

Spanish banks outperformed their European peers, helped by plans by Spain to change tax rules for Deferred Tax Assets (DTAs), a move the government said would strengthen their solvency.

Vodafone fell 4.8 percent after the mobile phone group said it had ended talks with Liberty Global about exchanging assets to better compete in Europe's converging telecoms and media markets.

However, there were signs elsewhere that merger activity remained alive, with SAB Miller shares rising 1.3 percent after the Sunday Times newspaper reported that Anheuser-Busch InBev SA could bid about $106 billion for SABMiller (Xetra: BRW1.DE - news) within days.

Today's European research round-up (Additional reporting by Sudip Kar-Gupta; Editing by Mark Heinrich)