Investors worldwide continued to dump stock Thursday amid weak reports that have economists once again whispering about the potential for a recession.
In Toronto, the market dropped nearly 400 points or 3.1 per cent of its value on the day.
The Canadian dollar fell nearly a cent to end the day at 101.17 cents US, as investors flocked to the perceived safety of the greenback.
In New York, the Dow Jones industrial average dropped 3.9 per cent on the day.
"It appears that, still shell shocked from last week, traders were quick to pull the rip cord and get out of the market first then ask questions later," Colin Cieszynski, an analyst at CMC Markets Canada, wrote in a report.
"The culprit for today's reversal of sentiment is a return to awareness that stagflation (low economic growth and high inflation) remains a very real prospect, that recession risks are increasing and that the European financial sector may continue to struggle for some time."
In the U.S., the Labour Department reported more people joined the unemployment line than the week earlier. The housing market was also down.
Meanwhile in Europe, bank stocks dropped on worries about the continent's debt problems.
And in Asia, Japanese exports fell for a fifth straight month.
Morgan Stanley reported the global economy is once again close to a recession. The bank cut its GDP growth forecasts to 3.9 per cent for 2011 and 3.8 per cent for 2012, compared to 4.2 per cent and 4.5 per cent, respectively.
Canadian economic news was slightly more positive Thursday, but was lost in the global downwards shuffle.
Statistics Canada said wholesale sales rose 0.2 per cent in June and that household demand remained firm, despite the TSX seeing its largest monthly decline since 2009.
With files from The Canadian Press
