By Scott Anderson
TORONTO, Jan 21 (Reuters) - Toronto's main stock market index plunged more than 500 points to its lowest level in more than 14 months on Monday, following a rout in overseas markets, as persisting worries over the well-being of the U.S. economy sent global investors running for the exits.
By late-morning, the Toronto Stock Exchange's S&P/TSX composite index .GSPTSE had lost 4.2 percent, or 533.61 points, to 12,203.51. Earlier, it had dropped to 12,181.20, its lowest since November 2006.
This was the biggest drop since mid-August when the TSX plunged 584.98 points in intraday activity before recouping much of the losses, as angst over the subprime mortgage crisis roiled the markets.
The closely watched U.S. markets were closed for Martin Luther King Day.
Toronto's stock market followed world markets lower as investors doubted an economic stimulus package unveiled late last week by President George W. Bush would be enough to shore up the U.S. economy.
"It's pretty ugly, but we're just following the global pattern," said Paul Hand, managing director at RBC Capital Markets. "It's all fears of more financial stress given the model lines and the overlay of a potential recession."
Every one of the TSX index's main groups fell, led by a 5.6 percent drop in the materials group and a 3.8 percent fall among energy shares. The heavily weighted financial group tumbled 4.1 percent.
The commodity-heavy materials index plunged as investors fretted that a possible slowdown in the world's biggest economy would damp demand for base metals.
Meanwhile, energy issues retreated as the price for U.S. crude oil dropped 1.8 percent to $88.94 a barrel on worries about the U.S. economy.
Twenty of the top 25 net loss leaders were all commodity-based issues, with miner First Quantum Minerals (FM.TO) down C$9.01, or 11.9 percent, at C$66.45, Potash Corp (POT.TO) off C$6.75, or 5.4 percent, at C$118.75 and Suncor Energy (SU.TO) down C$5.56, or 6 percent, at C$87.28.
Banking shares, which make up about 30 percent of the overall market's weighting, were led lower by the country's biggest banks.
"I think we may be into panic selling here and I don't know if we're at the bottom yet, but we have got to be getting close to it," said Rick Hutcheon, president and chief operating officer at RKH Investments.
"There is evidence that we are getting a little carried away with ourselves here." ($1=$1.03 Canadian) (Additional reporting by Jonathan Spicer and Leah Schnurr; Editing by Bernadette Baum)