Growing concern about a deepening global recession pulled North American stock markets lower Friday after a rollercoaster week which also saw the Canadian dollar take a record plunge.
Toronto's S&P/TSX composite index opened down nearly 700 points Friday, but thanks to an afternoon surge, it finished the day 37.62 points lower and closed at 9,294.09.
The early declines were led by drops in the energy sector as the November crude contract on the New York Mercantile Exchange fell.
The tumbling price for crude came despite a decision from OPEC Friday to cut output quotas by 1.5 million barrels a day.
By 4:30 p.m. ET, oil had risen slightly to US$63.66 a barrel.
However, any fleeting optimism in the market was dampened by an announcement from Chrysler that sagging sales would force the U.S. automaker to slash 25 per cent of its workforce starting next month.
Meanwhile, the TSX Venture Exchange slumped 27.04 points to close at 830.96 Friday, and the Canadian dollar was also down, dropping 1.08 cents to 78.56 cents US.
Eric Lascelles, an economist with TD Bank, said the falling numbers mirror the grim realization that the world's economies are indeed heading into a recession.
"There's been this steady, almost glacial-like movement towards the acknowledgement that there's not just a U.S economic slowdown but there's an outright U.S. recession," Lascelles told Â鶹´«Ã½net.
"There's just a lot of economic pessimism being plastered on top the credit crunch woes that have existed for some time," he said.
"I don't think we've seen the worst of it ... it's clear to me that we're still in a very precarious time."
In New York, the Dow Jones index closed down 312.3 points to finish the week at 8,378.95.
Before markets opened, the Dow Jones industrial average futures fell 550-points -- the maximum allowed price change -- forcing trading to be halted.
While many economists agree the world is heading into recession, Scotia Bank economist Warren Jestin called the current market situation an adjustment.
"I think what we're really in is a period of structural change, where we may have one or two quarters of declining activity, or we may have one up, one down," he told Â鶹´«Ã½net.
Still, he pointed out that slumping sales for cars and homes, combined with shrinking business investment, aren't good signs.
"Certainly, businesses are hunkering down for a fairly long and protracted setback, so business investment is softening - that exacerbates the problem," he said.
Also in New York, the Nasdaq composite index fell 51.88 points to end the week at 1,552.03.
Overseas, Japan's Nikkei 225 stock average lost 9.6 per cent while Hong Kong's Hang Seng closed down 7.8 per cent.
In Tokyo, Sony stock fell more than 14 per cent Friday after the electronics giant slashed its annual profit and sales forecasts citing poor demand.
The forecast was one of several triggers that frightened investors, prompting them to dump shares.
In Europe, London's FTSE 100 index was down 262.16 points or 6.4 per cent to 3,825.67 in afternoon trading, while Frankfurt's DAX 30 lost 7.16 per cent and the Paris CAC 40 gave back six per cent.
The British government announced Friday its gross domestic product fell 0.5 per cent in the third quarter -- placing the country at the brink of a recession.
Meanwhile, trading on the Russian stock market has been halted
Benjamin Reitzes, an economist with BMO World Markets, said the panic over financial markets has crested, but markets are now dealing with a lingering hang over.
He added that Friday morning's big losses were due to bad news from markets overseas.
"Sony warned, Samsung warned, Toyota warned that their sales would be lower; Air France gave some negative news as well," he said.
When asked if global markets have bottomed out, Reitzes said instability will continue for several financial quarters to come.
"It doesn't appear that we've necessarily reached the bottom yet. There's no real way to tell - we'll have to wait and see," he said.
