* Chinese shares post biggest drop in eight years
* Oil prices, commodities lower following China market rout
* Teva, Allergan jump after $40.5 bln deal
* Futures down: Dow 130 pts, S&P 13 pts, Nasdaq 35 pts (Adds details, comment, updates prices)
By Tanya Agrawal
July 27 (Reuters) - Wall Street was set to begin the week in the red on Monday on concerns about China's slowing growth in the wake of the biggest drop in Shanghai shares in eight years.
Chinese shares tumbled more than 8 percent as an unprecedented government rescue plan to prop up valuations abruptly ran out of steam, raising doubts about the viability of Beijing's efforts to stave off a deeper crash.
Commodity prices resumed their 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 were set for a rough start with Alibaba , Baozun, Sohu.com and JD.com off between 2 percent and 5 percent.
The S&P 500 and Nasdaq posted their largest weekly drops since March on Friday as slowing global growth dragged commodity-related stocks lower.
"This really has its roots in nervousness that began in the U.S. at the end of last week," said Andy Sullivan, a portfolio manager with Swiss investment firm GL Financial Group.
"Shanghai is an artificial market at the moment reliant on government support, and they have thrown the kitchen sink at it in recent weeks. The selling just ratcheted up steadily this morning."
S&P 500 e-minis were down 12.5 points, or 0.6 percent, with 233,536 contracts traded at 8:46 a.m. ET (1246 GMT). Nasdaq 100 e-minis were down 35 points, or 0.77 percent, on volume of 36,750 contracts while Dow e-minis were down 130 points, or 0.74 percent, with 29,467 contracts changing hands.
Earnings season continues with big oil, social media stocks and pharma companies scheduled to report this week.
Second-quarter S&P 500 earnings have been mixed, with 74 percent of companies beating analysts' profit expectations but just 52 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 with only a handful of stocks fuelling recent highs.
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.
A gauge of U.S. business investment plans rebounded solidly in June, suggesting the drag on manufacturing from capital spending cuts was starting to ebb.
The Commerce Department said non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, increased 0.9 percent last month after an unrevised 0.4 percent drop in May.
Teva Pharmaceutical's shares jumped 12 percent to $69.30 in premarket trading after it agreed to buy Allergan generic drugs business for $40.5 billion, giving up on its bid to buy Mylan. Allergan was up 6.4 percent at $328.01 while Mylan fell 13.5 percent to $57.
Fiat Chrysler was down 2.5 percent at $14.77 after the U.S. auto safety watchdog, National Highway Traffic Safety Administration, announced a $105 million fine against the automaker over lapses in its safety recalls. (Editing by Don Sebastian)