TORONTO - North American stock markets fell sharply again Wednesday as investor confidence was eroded by bad economic data and pessimism over the prospects of a U.S. bailout for the Big Three automakers.
Wall Street stocks were slammed the hardest, hitting levels not seen since 2003. In Toronto, all of the sectors were lower, led by diversified metals and financials stocks.
The main S&P/TSX composite index fell by 345.17 points to 8,490.56, a drop of nearly four per cent.
On Wall Street, the Dow Jones industrial average shifted down 427.47 points to 7,997.28. The Nasdaq composite index lost 6.5 per cent, or 96.85 points to 1,386.42 and the S&P 500 tumbled 52.54 to 806.58, the lowest close for that index since March 2003.
TSX financials stocks took a beating, down 4.9 per cent, after the Bank of Nova Scotia (TSX:BNS) warned Tuesday of a bigger-than-expected $595-million hit to its quarterly earnings caused by financial-market upheaval.
The other banks are expected to suffer similarly to Scotiabank when they issue their fourth-quarter results, starting next week. Scotia's shares were down $1.93 to $35.24.
The Canadian dollar was at 79.83 cents US, down 1.48 cents, and the TSX Venture Exchange lost 20.16 points to 730.09.
Top Senate Democrats said Wednesday that Congress is unlikely to reach a quick bailout for the Big Three Detroit automakers, who are pleading for $25 billion in cash to stave off bankruptcy.
Congressional Democrats have proposed using part of the $700 billion financial bailout package to pump into the ailing auto industry, but the White House opposes such an approach.
Investors are concerned at the repercussions should any of the three automakers collapse, an event that could ripple through an already battered North American economy.
"There's a general malaise among investors right now," said James Cox, managing partner of Harris Financial Group. "Everybody is in wait-and-see mode of what is going to happen with these big three automakers."
Bank of Canada governor Mark Carney strongly indicated Wednesday that the central bank will cut interest rates further next month in an effort to stimulate the economy. Carney told a luncheon in London that the economy is slowing more than previously thought, and inflation is less of a concern.
The TSX diversified metals sector slid 11.5 per cent, and Teck Cominco Ltd. (TSX:TCK.B) slid 15 per cent to $5.22.
Energy stocks were down 3.8 per cent as crude oil lost 77 cents to close at US$53.62 a barrel on the New York Mercantile Exchange.
The gold sector trekked 2.8 per cent lower as gold futures ended ahead for the first session this week on U.S. dollar weakness.
The December bullion contract closed up $3.30 to US$736 an ounce.
In economic news, Statistics Canada's composite leading index -- an indicator of future activity -- fell 0.4 per cent in October. It was the biggest decline since the early-1990s recession, after a 0.3 per cent drop in September.
New American data showed deepening weakness. Construction of new homes plunged 4.5 per cent last month to the lowest level on government records. The Commerce Department said residential construction fell to an annualized rate of 791,000 units.
U.S. consumer prices, meanwhile, fell by the largest amount in records dating back to 1947, down one per cent last month as gasoline prices receded sharply. Core prices, excluding volatile food and energy costs, were down 0.1 per cent -- the first decline in more than a quarter-century.
In earnings news, supermarket operator Metro Inc. (TSX:MRU.A) rang up $72.3 million in summer-quarter profit, up 25.5 per cent from year-ago earnings that were reduced by the integration of A&P stores. Sales were up 1.8 per cent from a year ago. Metro shares were at $33.
The Resolve Business Outsourcing Income Fund (TSX:RBO.UN) is suspending distributions to investors. The trusts units plunged 55 per cent, or $1.94, to $1.56.
Norsemont Mining Inc. (TSX:NOM) says its board has set up a special committee to deal with "recent unsolicited expressions of interest to acquire the company" and shares were ahead 15 per cent, or 25 cents, to $1.95.
Forestry company Tembec Inc. (TSX:TMB) fell to a quarterly loss of $4 million from year-earlier profit of $22 million, as sales declined to $629 million from $675 million. Shares dropped a penny to $1.56.
