The Toronto stock market closed down nearly 573 points Monday, after getting battered and bruised in early-day trading.
At one point, the S&P/TSX composite index was down almost 1,200 points. But by the end of the day, it finished at 10,230.43, a loss of 572.92 points.
"This is triggered by what has become very apparent -- that there is a credit crisis everywhere in the world," Sherry Cooper of BMO Capital Markets told Â鶹´«Ã½net.
"Banks in virtually every country are at risk of failure and there is little money being loaned to banks, between banks, from banks to households or to businesses."
The worldwide downturn has also led to a drop in commodity prices, a significant contributor to the health of Canadian markets.
"Canada is really an economy that depends on exports for much of its vitality, particularly on exports of natural resources," Avery Shenfeld of CIBC World Markets told Â鶹´«Ã½net. "They tend to do well when the global economy is booming but are the first to feel the pain when the global economy slumps."
Crude oil prices, which have a significant impact on the TSX, fell 1.5 cents to US$90.98 cents US, after falling below US$90 a barrel for the first time since February.
The Canadian dollar fell 1.5 cents to 90.98 cents US.
In the U.S., the Dow Jones Industrial Average took a 370-point dive, dipping below the 10,000 mark for the first time in four years. It finished at 9,956.
The Nasdaq composite index lost 84 points to sit at 1,863.
The slide shows investors are still concerned about the security of their money despite last week's passage of a U.S. bailout package totaling more than US$700 billion.
"I think it's worth noting that of the funds in that bailout package not a cent of it has been spent yet, so it's too soon to conclude that it hasn't worked yet," Shenfeld said.
U.S. President George W. Bush asked Americans on Monday to have patience while officials establish an action plan to distribute funds.
Bush told reporters that while he signed the bill last week, "it's going to take awhile" for the bailout program to get up and running.
The losses on the North American markets follow a dip in Asian markets spurred by growing uncertainty in the European markets. Elsewhere:
- In Japan, the Nikkei 225 index dropped 4.2 per cent to 10,475 Monday morning.
- Hong Kong's Hang Seng lost 3.4 per cent to hit 17,089.
- In other Asian trading on Monday, markets in mainland China, Australia, South Korea, India, Singapore, Indonesia and Thailand all saw losses.
On Sunday, Germany announced it was launching its own financial sector rescue package worth US$69 billion that would see Hypo Real Estate pulled back from the brink of failure.
Hypo is the country's second largest lender for commercial property purchases.
Germany also announced it would guarantee all bank savings. The move came as the Swiss national bank and the Bank of England also poured money into the markets.
Don Drummond of TD Bank told Â鶹´«Ã½net on Monday afternoon that the German bailout plan signals the U.S. credit crisis is actually a worldwide problem.
"I think it's finally dawned upon investors that everybody is affected by this and nobody is immune," Drummond said.
Over the weekend, Belgium's prime minister said France had committed to taking over 75 per cent of Fortis NV, a troubled European bank.
British treasury chief Alistair Darling said he was ready to take "pretty big steps" to deal with the financial turmoil.
