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Canada’s main stock index closed down Friday along with U.S. markets as most sectors slipped amid concerns that Turkey’s economic crisis could hit global markets.

Turkey’s currency plunged after the U.S. said it would impose further tariffs on the country as part of a political dispute. The instability in the lira, which is now down about 41% this year, has increased concerns over Turkey’s high debt levels and President Recep Tayyip Erdogan’s moves to consolidate power.

Markets reacted cautiously to the potential disruptions, said Patrick Blais, senior portfolio manager at Manulife Asset Management Ltd.

“It’s hard to dismiss any risk these days given valuations,” he said. “So, any large potentially material negative news flow should be expected to scare investors.”

European banks fell especially sharply on their higher exposure to the Turkish economy, as the banks are already struggling with profitability and low capital levels, said Blais.

“They’re still not on a sound footing to absorb any large disruption or dislocation.”

Investors globally are watching market moves closely as debt levels, in general, remain high, he said.

“At the end of the day there’s a lot of debt in the world and things are improving, but if there was a disruption or a slowdown a lot of that debt could become a problem … investors are just playing it safe.”

The Toronto Stock Exchange’s S&P/TSX composite index closed down by 90.47 points at 16,326.51 as sectors outside of information technology and energy dropped.

The index hit an intraday high of 16,362.52 while total volume on the index was 181.11 million shares. The index dropped 0.6% in the week.

The S&P/TSX capped consumer staples index, which had already been under pressure this week as some companies missed earnings and revised guidances, fell the most Friday with a 1.4% drop.

The information technology index saw the biggest gains at 0.4%, while energy managed a slight gain as the September crude contract closed up by US82¢ at US$67.63 a barrel.

In New York, the Dow Jones industrial average ended down by 196.09 points at 25,313.14. The S&P 500 composite index closed down by 20.30 points at 2,833.28 and the Nasdaq composite index was down by 52.67 points at 7,839.11.

The Canadian dollar averaged US76.26¢, down by 0.43 of a U.S. cent despite somewhat positive jobs numbers as global investors fled to the U.S. dollar.

“I think it’s just U.S. strength, and I think it’s a consequence of Turkish newsflow,” said Blais.

Statistics Canada reported that the economy generated 54,100 net new jobs last month and the unemployment rate hit a four-decade low of 5.8%.

The numbers, however, showed the country added 82,000 less desirable part-time positions and lost 28,000 full-time jobs. The public sector also made the biggest contribution to the July increase with 49,600 jobs while the private sector added 5,200 positions.

“The quality might not have been great, meaning a lot of part-time hires, but it still seemed stronger than many of us were expecting. So that was a little bit comforting,” said Blais.

The December gold contract closed down by US90¢ at US$1,219 an ounce and the September copper contract ended down two cents at US$2.74 a pound. The September natural gas contract ended down by a penny at US$2.94 per mmBTU.