The Toronto and New York stock markets tumbled Tuesday after a ratings agency downgraded Greece's debt to junk status.
The Toronto stock exchange lost more than one per cent of its value, closing to 12,146.74.
The Canadian dollar also dropped as the U.S, greenback gained strength. The loonie closed at 98.27 cents U.S.
Ratings agency Standard & Poor lowered its rating of Greece, depriving it of an investment grade rating, meaning the beleaguered country will have to pay more to borrow.
Greece has a bond payment of euro8.5 billion due on May 19, and there are fears the country may not have the money available by then, as Germany has been reluctant to pay most of the euro45-billion bailout for Greece.
"There are some valid concerns that the (bailout) might not happen," BNN's Kim Parlee told Â鶹´«Ã½ Channel. "People are concerned about a domino affect (if Greece defaults)."
Adding to the stock markets' jitters was that Portugal's debt rating was also lowered because of concerns over the country's handling of its debt load.
While Portugal's debt load is not as bad as Greece's, economists worry it could be the next casualty of Europe's economic woes.
"The moves today indicated to the market that the risk of contagion from Greece had increased and that the EU nations had not ring-fenced the risk that was emanating from Greece," David Watt, senior fixed income and currency strategist at RBC Capital Markets told The Canadian Press.
