* Futures down: Dow 34 pts, S&P 3.25 pts, Nasdaq 7.25 pts
By Yashaswini Swamynathan
Aug 22 (Reuters) - U.S. stock index futures were lower on Monday as oil prices fell the most in four weeks and dollar strengthened in anticipation of an interest rate increase this year.
* Oil dropped by more than 3 percent as analysts doubted upcoming producer talks would rein in oversupply and said August's rally looked overblown.
* The dollar index rose for the second day, after being in the red for five straight sessions, on prospects of the U.S. Federal Reserve raising interest rates in the coming months.
* As the earnings season comes to a close, investors are focusing on the annual meeting of central bankers from around the globe in Jackson Hole, Wyoming. Investors expect Fed Chair Janet Yellen, who speaks on Friday, to give more clarity on what the Fed is likely to do with the rates.
* Statements from Fed officials last week have been perceived hawkish, with New York Fed president and permanent voting member William Dudley saying a hike as soon as next month was possible.
* On Sunday, Fed Vice Chairman Stanley Fischer strengthened the sentiment by saying the U.S. economy was close to hitting job and inflation targets, factors on which a rate hike hinges.
* Wall Street closed lower on Friday, with the major indexes barely making any gains, as investors weighed prospects of a rate hike.
* Traders have priced in a 12 percent chance of a rate hike for September and a 39.1 percent chance for December, according to the CME Group's FedWatch tool.
* Medivation shares jumped 19.1 percent to $80 premarket after agreeing to be bought by Pfizer for $14 billion.
* Valeant's U.S.-listed shares rose 4.6 percent to $30.05 after the Canadian drugmaker named a new chief financial officer.
* Agios Pharmaceuticals fell 9.3 percent to $36.18 after BTIG initiated coverage with a "neutral" rating.
* No major U.S. economic data is scheduled for release on Monday.
Futures snapshot at 6:54 a.m. ET:
* Dow e-minis were down 34 points, or 0.18 percent, with 19,703 contracts changing hands.
* S&P 500 e-minis were down 3.25 points, or 0.15 percent, with 140,664 contracts traded.
* Nasdaq 100 e-minis were down 7.25 points, or 0.15 percent, on volume of 20,045 contracts. (Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Don Sebastian)