* Chinese shares drop the most in eight years
* Oil prices, commodities lower following China equity selloff
* Dow hits lowest level since February
* Teva, Allergan jump after $40.5 bln deal
* Indexes end down: Dow 0.72 pct, S&P 0.57 pct, Nasdaq 0.96 pct (Updates to late close, adds detail)
By Noel Randewich
July 27 (Reuters) - Wall Street sank on Monday, with the Nasdaq losing almost 1 percent after the steepest decline in Chinese stocks in eight years increased concerns that cooling growth in the world's No. 2 economy could hurt China's trading partners.
The Dow Jones industrial average finished at its lowest since February, the Nasdaq Composite hit a four-week low and the benchmark S&P 500 ended at its lowest in over two weeks.
In an additional negative sign, 480 stocks hit 52-week lows on the New York Stock Exchange, the most in one day since Oct. 15.
After Chinese stocks plunged more than 8 percent, the top securities regulator said Beijing would keep buying shares to stabilize the market as an unprecedented rescue plan already in place appeared to sputter.
U.S.-listed shares of Chinese companies slid, including Alibaba and Baozun.
Commodity prices resumed a downward spiral, with the Thomson Reuters CRB commodities index hitting a six-year low and oil a four-month low.
"It's hard to assess whether China single-handedly can deep-six the market," said Chuck Carlson, chief executive at Horizon Investment Services in Hammond, Indiana. "A significant slowdown in China impacts not just the U.S. but global players as well."
The Dow Jones industrial average fell 0.72 percent to end at 17,441.79 points.
The S&P 500 lost 0.57 percent to end at 2,067.75. The Nasdaq Composite dropped 0.96 percent to 5,039.78.
Nine of the 10 major S&P 500 sectors were lower, with the energy index's 1.35 percent fall leading the decliners.
With second-quarter reports well under way, analysts expect overall earnings of S&P 500 companies to dip 0.3 percent and revenue to decline 3.9 percent, according to Thomson Reuters data.
Such results could inflate already relatively pricey valuations. The S&P 500 trades near 16.9 times forward 12-month earnings, above the 10-year median of 14.7 times, according to StarMine data.
"Valuations are a concern right now," said Randy Frederick, managing director of trading and derivatives for Charles Schwab in Austin. "We really need to see corporate revenue growth."
The main event for U.S. markets this week is likely to be the two-day U.S. Federal Reserve meeting, the last before September, which still looms as the first possible date for an interest rate increase.
Teva Pharmaceutical's shares jumped 16.41 percent to a record high of $72.00 after it agreed to buy Allergan's generic drug business for $40.5 billion, giving up on its bid to buy Mylan. Allergan rose 6.09 percent while Mylan fell 14.51 percent.
Fiat Chrysler fell 4.88 percent after a U.S. auto safety watchdog announced a $105 million fine against the automaker over lapses in safety recalls.
On the NYSE, 2.73 stocks fell for every one that rose. On the Nasdaq, decliners outnumbered gainers 2.47 to 1.
The S&P 500 index posted 3 new 52-week highs and 58 lows; the Nasdaq Composite saw 21 new highs and 246 lows. (Additional reporting by Tanya Agrawal; Editing by Bernadette Baum and Nick Zieminski)