Canada's stock market dove nearly 300 points Tuesday and the Canadian dollar sank more than a cent on concern a Greek plan to hold a referendum on Europe's bailout will deepen the debt crisis.
The announcement, along with a surprisingly weak reading on China's manufacturing activity, sent stock markets around the world tumbling. European stocks fell 3 per cent and MSCI's all-country world stock index shed nearly 2 per cent.
The S&P/TSX benchmark index fell 285.06 points or 2.3 per cent to 11,967.00, bringing its losses to 11 per cent this year. The Canadian dollar weakened to 98.71 cents (U.S.) from Monday's close of $1.0033.
Oil, copper and gold prices also tumbled while the euro hit a three-week low after Prime Minister George Papandreou unexpectedly put forward a plan for a referendum, raising the prospect of derailing the European bailout effort and pushing Greece into default.
"The decision will lead to weeks of uncertainty in times when EU and euro zone countries need to be united in order to tackle the debt crisis effectively," IHS country analyst Blanka Kolenikova and senior economist Diego Iscaro said in a note.
In the U.S., the Dow Jones industrial average fell more than 200 points or 1.9 per cent and the S&P 500 lost about 2.2 per cent.
Mr. Papandreou will take part in the Group of 20 summit in Cannes this week to discuss plans for the referendum after being asked to attend by France, a government official said on Tuesday.
"This takes biting that hand that feeds you to a new extreme," said Andrew Pyle, investment adviser with ScotiaMcLeod, in a note to clients.
"We were always cautious regarding opposition to the plan from other EU members, but when this is designed to keep Greece from the world of unwieldy default, it's a real head scratcher."
With files from Bloomberg and Reuter