The Toronto stock market fell more than 765 points to 7,724.76 on Thursday, plummeting to its lowest level in half a decade during an afternoon of rollercoaster trading.
The S&P/TSX composite was pushed down by the declining price of crude oil, loss of value from mining stocks, and more bad news from the Canadian banking industry.
The TSX energy sector was down nearly 5.5 per cent as crude oil fell below the US$50-a-barrel mark on the New York Mercantile Exchange for the first time since 2005 before bouncing back slightly. It was trading at US$48.70 at 3:30 p.m.
Meanwhile, the financial sector lost 8.7 per cent after TD Bank revealed it will report $350 million in quarterly credit trading losses.
The Canadian dollar closed down 2.52 cents and ended the day 77.31 cents US, after dropping 1.48 cents Wednesday.
Still, Jonathan Sceeles, a financial advisor at Edward Jones, said investors shouldn't panic.
"We have nothing to fear but fear itself, and fear is driving this market," he told Â鶹´«Ã½net.
While a falling Canadian dollar and a low price of oil may seem like bad news, Sceeles said that many sectors of Canada's economy will actually benefit in the long run.
"People have to be patient. When you think about it, oil falling is good for every other industry - except the energy industry itself," he said.
"Other companies were reeling in the last year because their cost of delivery, their cost of manufacturing (and) their cost of making plastic went up because oil prices were so high. Well now, they just got a bit of relief with oil coming down," he said.
Sceeles noted that a lower Canadian dollar will also be good for the manufacturing sector in both Ontario and Quebec, which has been battered by a high dollar over the past few years.
U.S. jobless numbers rise
Meanwhile, new statistics showing that an increasing numbers of Americans are losing their jobs don't bode well for investors or the global economy.
The U.S. Labor Department said Thursday that new claims for unemployment benefits jumped last week to a 16-year high. The government said new applications for jobless benefits rose to a seasonally adjusted 542,000, well above the 505,000 jobless that economists expected in a survey conducted by Thomson Reuters.
In New York, the Dow Jones industrial average fell 50.58 points to 7,947. The Nasdaq composite slipped 5.49 points to 1,381 and the S&P 500 was off 4.88 to 802.
On Wednesday, both the Dow Jones and the S&P 500 closed at their lowest levels since March 2003.
Overseas, stock markets also fell Thursday with the FTSE 100 index of leading British shares down 2.8 per cent.
In Germany, the DAX fell 2.9 per cent and the Paris CAC-40 lost 3.5 per cent.
Earlier Thursday, Tokyo's benchmark Nikkei 225 average slid down 570.18 points, or 6.9 per cent, to 7,703.0.
The downturn came as new data showed exports in October sank 7.7 per cent -- the biggest decline since 2001.
In South Korea, the country's main index fell for its eighth straight session, losing 6.7 per cent to 948.69. Hong Kong's Hang Seng benchmark sank 517.24 points, or 4 per cent, to 12,298.56.
"We've gone past the poor sentiment stage," said Miles Remington, head of Asian sales trading at BNP Paribas Securities in Hong Kong.
"People are looking for any kind of positive and there are just no positives out there. Everyone seems to be united in the depressed global outlook," he said. "Whether it's commodities or equities, everything seems to be on a downturn."
Officially, Japan, Hong Kong and European countries including Germany and Italy are in recession.
Most analysts expect the U.S. and Britain to fall into recession very soon.
On Wednesday, Bank of Canada governor Mark Carney told reporters a recession in 2009 was at least "a possibility."
"Starting from flat growth in the first quarter of 2009 and the second quarter of 2009 ... recession is a possibility for Canada," he said.
With files from The Canadian Press
