After a flat morning for the Toronto Stock Exchange, a sharp late-day drop in shares across all sectors saw the benchmark index close down nearly 3%.

The S&P/TSX composite index fell 242.1 points, or 2.8%, to finish the day at 8,931.9.

Financial companies experienced the sharpest fall, down 3.4%.

Manulife Financial Corp. shares fell 4.9% to $18.98 after the company announced it had completed a previously announced common share offering in which it raised $2.275 billion.

Royal Bank of Canada shares fell 3.7% to $33.96 and Toronto-Dominion Bank dropped 4.7% to $40.49.

National Bank of Canada shares plummeted $3.10, or 9.4%, to $29.81.

Oil futures soared 10.2% on expectations that OPEC will cut member nations’ production quotas next week. Crude for January delivery rose US$4.46 to US$47.98 a barrel on the New York Mercantile Exchange.

Despite the gains, the TSX energy group slipped 1.8% on Thursday.

EnCana Corp. shares tumbled 7.4% after the major oil company cut its 2009 capital budget to $6.1 billion, down from an estimated $7.4 billion in 2008. EnCana shares closed at $55.22.

Petro-Canada announced similar plans to slash spending on oil and natural gas projects next year by 25%, to $4 billion. Its shares slipped just two cents to close at $28.98.

Not all oil-sector news was bad. Canadian Natural Resources Ltd. moved up by 4.9% to end at $44.75 and Nexen Inc. shares gained 1.4% to $22.04.

The materials group fell 3.3% despite more gains for gold futures. Gold for February delivery rose US$17.80, or 2.2%, to end at US$826.60 an ounce on the New York Mercantile Exchange. That’s up 10% from Friday’s closing level of US$752.20 an ounce.

The sub-gold index fell 3.4%.

Kinross Gold Corp. tumbled 6.3% to $19.32 and Agnico-Eagle Mines Ltd. fell 4% to $44.40.

Agrium Inc. shares dipped 6.7% to $36.00 and Potash Corp. shares fell 7.5% to $81.00.

Gainers included Teck Cominco’s B-class shares, up 9.1% to $5.27 and Red Bank Mining Inc., up 4% to $6.76.

T-shirt maker Gildan Activewear Inc. saw its shares take a 35% nosedive after the company reported fiscal fourth quarter net earnings of $21.4 million, down from $40.9 million a year earlier, mainly due to an audit-related tax charge. Gildan shares closed at $11.60.

Meanwhile, it was a positive day for junior companies on the Venture exchange. The S&P/TSX Venture composite gained 7.9 poins, or 1.1% to end at 713.44.

The Canadian dollar moved up by US0.64¢ to end at US81.06¢.

Markets south of the border tumbled after the U.S. Labour Department said initial jobless claims increased by a bigger-than-forecast 58,000 to 573,000 in the week ended Dec. 6, the highest level since November 1982.

The Dow Jones industrial average fell 196.33 points, or 2.24%, to close at 8,565.09.

The Nasdaq composite dipped 57.6 points, or 3.7%, to finish at 1,507.88 and the S&P 500 index dropped 25.65 points, or 2.9% to 873.59.