Global stock markets declined on Wednesday as Spain's emerging banking crisis stoked fears that conditions are about to get a lot worse in Europe.
In Toronto, the S&P/TSX lost 142.02 points, to 11,467.28 points. Materials and energy stocks led the selloff. Shares of both Suncor Energy and Teck Resources were down more than 3 per cent. Goldcorp lost 2 per cent.
Shares of Research In Motion were decimated, after the company warned late Tuesday of additional financial disappointment, announced further job cuts and said it had hired strategic advisers. RIM's stock was the most active on the TSX in early trading, falling $1.09 to $10.39.
In New York, the S&P 500 dropped 14.29 points, to 1,318.13. The Dow Jones industrial average surrendered 122.15 points, to 12,458.54. Bank of America was the most actively traded stock, declining more than 1 per cent. Ford Motor Co. slipped 2 per cent and Morgan Stanley lost 3 per cent.
The euro fell to the lowest level in almost two years against the dollar as the debt crisis firmly engulfed Spain. The yield on 10-year Spanish government bonds is rapidly approaching 7 per cent, the critical level at which both Greece and Ireland required emergency bailouts. The yield jumped almost 23 basis points to 6.69 per cent, after the credit-rating firm Egan-Jones Ratings Co. downgraded Spanish debt.
Adding to the sense of urgency, the European Union is calling for the creation of a "banking union" among the 17 members of the euro zone that has powers to both oversee and bail out the sector, if necessary.
Investors aren't seeing any silver lining overseas. There's no significant economic data out of the U.S. today. Meanwhile, there are new concerns that China's latest stimulus measures are too small.
The yield on U.S. 10-year Treasury notes hit a new low, as investors worrying about the mounting financial risk in Europe directed more funds into low-risk holdings and out of assets such as commodities.
Copper fell 5.6 cents (U.S.), or 1.6 per cent, to $3.406 a pound. The price of a barrel of oil fell $1.39, to $89.37. Gold gained $4.40 an ounce to trade at $1,573.30. The loonie slipped half a cent against the U.S. dollar, to 97.26 cents in early trading.