The Toronto stock market closed at its lowest level in more than three months on Thursday as growing concerns over global credit markets sparked a massive selloff in equities.

Several major U.S. financial institutions reported losses while BNP Paribas, France’s biggest listed bank, froze US$2.2 billion worth of funds.

The S&P/TSX composite index plunged 280.18 points, or more than 2%, at 13,478.01, after gaining nearly 200 points the day before.

There were 704,261 trades on the TSX, a new historical high. The previous high was 636,327 trades on July 26, 2007.

The benchmark index has fallen in nine of 14 sessions and has lost more than 7.8% since July 19, when it touched a record peak of 14,646.82.

Stocks plunged across the board with a drop of more than 1% in all but three sectors — utilities, consumer staples and consumer discretionary.



Banks, which led all equities higher on Wednesday, reversed course sharply as worries over lending markets rose.

The TSX financials sector, which represents about a third of the overall index, fell 2.7% to log its steepest decline of the year.

Royal Bank of Canada shares dropped $1.69, or 3%, at $53.65, and Toronto-Dominion Bank shed $2.77, or 3.9%, at $67.98.

Manulife Financial, which reported strong quarterly earnings and surged the day before, sagged 72¢, or 1.8%, to $40.03.

The latest lending market scare prompted central banks to take action. The Bank of Canada said on Thursday it had injected a larger than normal $1.64 billion into money markets to meet liquidity needs.

The junior S&P/TSX venture composite index fell 96.41 points to 2,934.22.

The Canadian dollar fell 0.71 of a cent to US94.65¢ US after briefly losing nearly a penny and a half in earlier trading.

In New York, the Dow Jones industrial average tumbled 387.18 points, or 2.83%, to close at 13,270.68, its steepest drop since February.

The Nasdaq composite index sank 56.49 points, or 2.16%, to close at 2,556.49. The S&P 500 fell 44.40 points to 1,453.09.