Toronto's main stock market index tumbled more than 2 percent on Monday afternoon as fears of a Greek debt default that could spread to other countries ripped through world markets.
The S&P/TSX composite underperformed its U.S. counterparts as hard-hit commodity prices pressured the resource-heavy index, with investors cashing out of even safe-haven bullion to cover losses elsewhere.
It's quite stunning that we are down over 2 percent, said Francis Campeau, broker at MF Global Canada in Montreal.
The gold sector used to play a counter-weight to the financial firms, and today (both sectors) are going south ... so for the first time in roughly a month we've underperformed on a down market.
Greece confirmed on Monday that it had only enough cash for a few more weeks, and concerns grew that Moody's Investors Service could downgrade the credit-worthiness of French banks, which are widely exposed to Greek bonds.
At 1:50 p.m. (1750 GMT), the Toronto Stock Exchange's S&P/TSX composite index was down 274.45 points, or 2.22 percent, at 12,113.09. All of the index's 10 sectors were lower.
Earlier, the TSX fell as low as 12,101.83, its weakest level since Aug. 26. Among heavily weighted stocks, Royal Bank of Canada dropped 2.7 percent to C$46.17, Goldcorp lost 4.2 percent to C$52.58, while Suncor Energy fell 3.7 percent to C$28.36.
Campeau said the index could re-test its August lows, roughly a 1-1/2 percent drop from its current level, through the week. Risk aversion was exacerbated by the failure of the weekend's meeting of finance ministers from the Group of Seven industrialized nations to come up with any fresh proposals for boosting global growth.
We still see some strong fundamentals out there in the marketplace...but if things do worsen on an economic basis, it will impact the corporate balance sheets, it's a given, said Serge Pepin, head of investments at BMO Investments.