Bank stocks led the S&P/TSX composite index lower Wednesday after Bank of Nova Scotia said it was taking $595 million in after-tax charges related to the recent market volatility.

The benchmark index closed down 345.17 points, or 3.9%, at 8,490.56, its lowest level since September 2004. Its previous 2008 low was 8,537.34, hit in late October.

The financial group slid 4.9%. Scotiabank sank 5.2% to $35.24,

Scotiabank is set to kick off Canadian banks’ earnings season on Dec. 2.

Royal Bank of Canada dropped 5.4% to $41.19, while CIBC fell 5.1% to $48.29, and Manulife Financial fell 6.2% at $20.97.

The energy group was off 3.8% as oil prices settled to US$53.62 a barrel on a weak demand outlook amid a slowing economy, and rising crude oil inventories.

Gold prices gave back earlier gains and pressured the broader materials group, which dropped 4.3%.

Barrick Gold Corp rose 2.9% at $26.49, but Agnico-Eagle fell 11.9% to $33.08 on stock dilution fears after it said it will raise US$252 million in a private placement.

The junior S&P/TSX Venture composite index fell 20.16 points, or 2.69%, to 730.09.

The Canadian dollar was at US79.83¢, down 1.48¢.

In New York, stocks plunged to their lowest in five-and-a-half years on North American automotive executives pleaded for a government handout.

Late in the day, the U.S. Federal Reserve slashed its economic growth forecasts through 2009, helping unleash a wave of selling.

The Dow Jones industrial average tumbled 427.47 points, or 5.07%, to 7,997.28. The S&P 500 fell 52.54 points, or 6.12%, to 806.58. The tech-heavy Nasdaq composite index lost 96.85 points, or 6.53%, to 1,386.42.

It was the first time the Dow closed below the 8,000 level since March 2003. The S&P 500 and the Nasdaq broke through last week’s intraday lows, which were the lowest in more than five years.

IE