* Chinese shares drop the most in eight years
* Oil prices, commodities lower following China equity crash
* Dow hits lowest level in five months
* Teva, Allergan jump after $40.5 bln deal
* Indexes down: Dow 0.73 pct, S&P 0.5 pct, Nasdaq 0.89 pct (Updates to afternoon trading)
By Noel Randewich
July 27 (Reuters) - Wall Street sank on Monday, following the steepest decline in Chinese stocks in eight years, on worries cooling growth in the world's No. 2 economy would hurt its key trading partners.
The Dow Jones industrial average fell to its lowest since February, while the Nasdaq composite touched a four-week low and the benchmark S&P 500 hit its lowest in more than two weeks.
The NYSE showed 459 stocks at 52-week lows, the most in a day since Oct. 15.
After Chinese shares plunged more than 8 percent, the country's top securities regulator said Beijing would keep buying shares to stabilize the market, as an unprecedented rescue plan already in place appeared to sputter.
Commodity prices resumed a downward spiral, with the broader Thomson Reuters CRB commodities index hitting its lowest in six years and oil prices hitting a four-month low.
Chinese ADRs including Alibaba, Baozun, Sohu.com and JD.com slid.
Investors said the rout added to worries about global growth after a poor economic reading out of China late last week.
"It's hard to assess whether China single-handedly can deep six the market," said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana. "A significant slowdown in China impacts not just the US but global players as well."
At 2:14 p.m., the Dow Jones industrial average fell 128.61 points, or 0.73 percent, to 17,439.92, the S&P 500 lost 10.31 points, or 0.5 percent, to 2,069.34 and the Nasdaq Composite dropped 45.49 points, or 0.89 percent, to 5,043.14.
Eight of the 10 major S&P 500 sectors were lower, with the materials index's 0.86 percent fall leading the decliners.
Second-quarter S&P 500 earnings have been mixed, with 74 percent of companies beating analysts' profit expectations but just 51 percent surpassing revenue expectations, according to Thomson Reuters data.
Adding to the concerns regarding lukewarm earnings, the S&P 500 is relatively expensive, trading at 16.9 times forward 12 months' earnings, above the 10-year median of 14.7 times, according to StarMine data.
Investors are also keeping a sharp eye on economic data ahead of this week's U.S. Federal Reserve's two-day meeting, the last before September, which still looms as the first possibility for an interest rate increase.
Teva Pharmaceutical's shares jumped as much as 13.3 percent to a record high of $70.06 after it agreed to buy Allergan generic drugs business for $40.5 billion, giving up on its bid to buy Mylan. Allergan was up 7.02 percent at $329.87 while Mylan fell 14.63 percent to $56.28.
Fiat Chrysler fell 4.8 percent at $14.42 after a U.S. auto safety watchdog announced a $105 million fine against the automaker over lapses in its safety recalls.
Declining issues outnumbered advancing ones on the NYSE by 2,174 to 867. On the Nasdaq, 1,971 issues fell and 804 advanced.
The benchmark S&P 500 index posted 2 new 52-week highs and 56 new lows; the Nasdaq Composite recorded 18 new highs and 226 new lows.
Additional reporting by Tanya Agrawal; Editing by Bernadette Baum