Canadian equities fell sharply on Tuesday as investor uncertainty over a new U.S. rescue plan dragged down energy and financial shares on the Toronto Stock Exchange.

The S&P/TSX composite index tumbled 229.39 points, or 2.5%, to close at 8,817.89.

The energy group slid 4.4% after oil futures incurred a one-day drop of more than 5%. Crude oil for March delivery fell US$2.01, or 5.1%, to close at US$37.55 a barrel on the New York Mercantile Exchange.

Within the energy group, Canadian Natural Resources Ltd. fell 5.2% to $44.88 and EnCana Corp. dropped 4.4% to $55.31.

Petro-Canada shares fell 5.2% to $28.26 and Suncor Energy Inc.’s stock tumbled 5.7% to $24.56.

Also lower was Husky Energy Inc., down 5.7% to $29.80, and Niko Resources Ltd., down 5.5% to $52.25.

Tusk Energy Corp. saw its shares more than double after it announced a deal to be taken over by a unit of Teachers Insurance and Annuity Association of America in a deal valued at $257 million. Tusk shares soared $1.22 or 141.9% to $2.08.

Financial stocks experienced a significant 4% drop of their own on Tuesday.

This included a 4.5% drop for shares of Bank of Montreal, which closed at $30.36 and a sharp 5.9% decline for shares of Manulife Financial Corp., which ended at $20.09.

Sun Life Financial Inc. shares fell $1.51, or 6%, to close at $23.80.

Kingsway Financial Services Inc. saw its stock continue to fall after Monday’s news that the company would cut 750 jobs, and warned of a large fourth-quarter loss. Kingsway shares fell $0.61, or 12.5%, to $4.28.

The materials group was a bright spot on the TSX, edging up 0.3% as gold futures advanced in New York.

Gold for February delivery ended up US$21.30, or 2.4%, at US$913.70 an ounce on the Comex division of the New York Mercantile Exchange.

The sub-gold index rose 0.9% in Tuesday’s trading.

Materials industry gainers included Goldcorp Inc. up, 2.1% to $36.83, and Agnico-Eagle Mines Ltd., higher by 2.3% to $66.00.

Others declined on Tuesday, including First Quantum Minerals Ltd., down a sharp $4.04, or 13%, to $26.96 and Teck Cominco Ltd., off 9.8% to $4.96.

Shares in Inmet Mining Corp. slipped 3.6% to $25.65 after the company reported a fourth-quarter loss of $32.5 million on asset writedowns and low metal prices.

The junior S&P/Venture composite index edged up 1 point, or 0.1%, to close at 902.09.

The Canadian dollar plunged nearly two cents against the U.S. dollar, to close at US80.24¢.

American equities plummeted on Tuesday as a new financial sector rescue plan unveiled by U.S. Treasury Secretary Tim Geithner failed to inspire investor confidence.

The Dow Jones industrial average closed down 381.99 points, or 4.62%, to 7,888.88—the lowest close since Nov. 20 and the biggest one-day drop since Dec. 1.

The S&P 500 fell 42.73, or 4.91%, to 827.16.

The Nasdaq composite dropped 66.83, or 4.2%, to 1,524.73.

IE