Toronto stocks fell sharply Thursday dragged down primarily by plunging resource and financial issues.

The S&P/TSX composite index slid 250.11 points, or 1.82%, to close at 13,524.43.

The gold subgroup shed 2.9% as bullion futures plunged US$28 an ounce to US$786.70 an ounce as the U.S. dollar gained strength.

The metals and minerals group dropped 3.4% and energy stocks slid 1.3%.

Oil prices fell 66¢ to US$93.43 a barrel following an unexpected increase in U.S. crude inventories.

A 4% drop in the consumer staples group was due largely to shares of Loblaw, which fell $5.04, or 12%, to $35.55 after the grocery chain reported a bigger-than-expected plunge in quarterly earnings.

The financials group dropped 2% amid a continuing parade of foreign banks announcing major writedowns related to the slumping U.S. mortgage market and the resulting credit crunch.

Shares of all the big banks fell, led by CIBC’s drop of $3.73 to $88.57.

The UK’s Barclays Capital announced a US$2.7 billion writedown Thursday.

The junior S&P/TSX Venture composite index fell 44.19 points, or 1.48%, to end at 2,944.57.

The Canadian dollar retreated back below US$1.02. The dollar shed 1.97¢ to finish the day at US$1.0151.

The dollar’s latest decline followed a report that said sales in Canada’s manufacturing sector fell in September as the loonie’s strength weighed on the sector.

In New York, U.S. stocks sank on worries that credit losses from mortgage defaults and slumping home prices would grow worse, hurting the economy and corporate profits.

John Stumpf, CEO of Wells Fargo & Co., the No. 2 U.S. mortgage lender, told a conference that the U.S. housing slump was far from over and was the worst since the Great Depression.

The Dow Jones industrial average slid 120.96 points, or 0.91%, to finish at 13,110.05. The S&P 500 dropped 19.43 points, or 1.32%, to close at 1,451.15. The Nasdaq composite index fell 25.81 points, or 0.98%, to 2,618.51.