GLOBAL MARKETS-China stocks rout stings world equities, commodities

(Adds closing New York prices, quotes)

* Wall St's Nasdaq off nearly 1 percent

* Dollar falls 1 percent against euro

* Brent crude settles down 2 percent

* Shanghai market records biggest daily loss since 2007

* Fed meets on Tuesday and Wednesday

By Michael Connor

NEW YORK, July 27 (Reuters) - The biggest rout in Chinese shares in eight years stoked concerns over slowing growth in the world's No. 2 economy on Monday, knocking down global equities and the prices of key commodities.

The dollar eased on safety bidding for other major currencies and the euro topped $1.11 for the first time in two weeks, supported by strong German business sentiment data.

Wall Street ended down on the worries over China's slowing growth, crystallized by a stunning 8.5 percent fall in Shanghai shares that also rattled equity markets in Europe and Asia.

China's top securities regulator quickly said the government would continue to buy shares to stabilize the stock market as an unprecedented rescue plan already in place appeared to be sputtering.

"Dollar weakness against the euro and the yen is a risk-aversion story reflecting China stocks," said currency strategist Richard Franulovich at Westpac in New York.

Wall Street's Dow Jones industrial average finished down 127.94 points, or 0.73 percent, to 17,440.59, the S&P 500 ended down 12.01 points, or 0.58 percent, to 2,067.64 and the Nasdaq Composite lost 48.85 points, or 0.96 percent, to 5,039.78.

Nine of the 10 major S&P 500 sectors were lower.

Shares (Berlin: DI6.BE - news) of Teva Pharmaceutical jumped 16.41 percent to a record high of $72.00 after it agreed to buy Allergan (NYSE: AGN - news) 's generic drugs business for $40.5 billion, giving up on its bid to buy Mylan (Frankfurt: 6MY.F - news) . Allergan rose 6.09 percent while Mylan fell 14.51 percent.

Share (LSE: SHRE.L - news) indices in Frankfurt and Paris tumbled more than 2.5 percent , while London's FTSE 100 ended down 1.13 percent. MSCI (NYSE: MSCI - news) 's broadest index of Asia-Pacific shares outside Japan fell 1.7 percent.

Both copper, for which Chinese demand is an important driver, and the broader Thomson Reuters CRB commodities index hit their lowest levels in six years. Copper futures fell another 1.4 percent on Monday.

Oil hit four-month lows after the Chinese stock crash fueled worries the world's biggest energy consumer may cut back and as more evidence emerged of a global crude supply glut.

Brent crude oil settled down $1.15, or 2 percent, at $53.47 a barrel. In post-settlement, it fell to as low as $52.90, its lowest since mid-March.

Despite the still-patchy economic news, many analysts expect U.S. Federal Reserve policymakers meeting this week to raise interest rates in September.

Expectations of a rate hike have slowly pushed up U.S. Treasury yields and widened the dollar's premium over the euro. But the euro has also tended to rise when investors get more concerned about global growth and rein in riskier bets, as they did on Monday.

The euro pared some of its early gains from a bullish Ifo survey of German business sentiment to stand up 1 percent on the day at $1.1094. A dollar index was down 0.70 percent, while the greenback was down 0.4 percent versus the yen.

U.S. Treasury prices got a lift from international investors seeking shelter from tumbling stocks. The 10-year note was last up 11/32 and yielding 2.2337 percent. (Additional reporting by Herbert Lash in New York, Patrick Graham in London, Pratima Desai and Karolin Schaps; Editing by Dan Grebler)