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TORONTO (Reuters) - Toronto's main stock index plunged to its lowest level in nearly a year on Monday, tracking a fall in world equities and commodity prices, on rising fears of a U.S. recession exacerbated by the United States' loss of its triple-A credit rating.
The index, which saw its biggest intraday slide since March, 2009, closed down more than 4 percent as the U.S. downgrade hammered investor confidence across the globe.
"It's a pretty scary day," said Elvis Picardo, strategist and vice president of research at Global Securities in Vancouver.
"It's not just the ratings downgrade in the U.S. It's also intensifying concern about the impact the ratings downgrade would have on global economic growth, and you are seeing that manifest itself in a sell-off in energy and material prices."
The energy sector led the index's dive, dropping 7.21 percent as oil plunged 5 percent, crashing below technical support levels. Suncor Energy was the most influential decliner, down 6.93 percent at C$30.10. Canadian Natural Resources lost 6.2 percent to trade at C$33.05.
The financial sector, down 3.69 percent, also weighed heavily. Royal Bank of Canada down 3.1 percent at C$48.51, and Manulife Financial, which shed 8.3 percent to C$12.53, were leading decliners.
The Toronto Stock Exchange's S&P/TSX composite index closed down 491.21 points, or 4.04 percent, to 11,670.96.
Earlier in the session it fell to 11,617.81, its biggest intraday fall in more than two years and its lowest point since August 25.
The index has fallen nearly 9 percent in the last three sessions and more than 18.5 percent since March 7, when it touched its 2011 high.
"I would refer to it as close to capitulation. Any day when you have the S&P down nearly 500 points and the Dow off over 500 points, I would consider it an emotional panic on the part of investors," said Paul Taylor, chief investment officer at BMO Harris Investment Management Inc.
Canadian stocks did slightly better than their U.S. peers. Panicked selling on heavy volume drove the S&P 500 down more than 6 percent, with every stock in the benchmark index ending in negative territory.
Industrial metals also fell sharply, weighing on Canadian base-metal miners. Teck Resources was among the heaviest weights as it fell 9.2 percent to C$37.81.
But gold miners were seen as a relative safe-haven investment, with the price of bullion vaulting to a record over $1,700 an ounce. Barrick Gold was up 2.29 percent to C$45.92, topping the minority of advancers that were mostly gold miners. Goldcorp gained 2.1 percent at C$46.31.
All told, materials, home to gold-mining stocks, were down 1.77 percent with the index's gold subgroup helping to cushion losses, up 1.86 percent.
The anxiety about the U.S. economy was matched by rising worries about Europe's debt problems. Even the European Central Bank's dramatic intervention in bond markets, which pushed down yields on Spanish and Italian bonds, was not enough to stem selling.
Investors are looking to a meeting of the U.S. Federal Reserve on Tuesday for signs of further support for reeling financial markets and the economy.
While most analysts still expect the Federal Reserve to not make any major changes in policy at its meeting on Tuesday, some are beginning to wonder whether the market disruptions of recent sessions warrant some kind of central bank intervention.
With additional reporting by Andrea Hopkins; Editing by Jeffrey Hodgson