A late afternoon selloff dragged the Toronto Stock Exchange’s main index into an official correction on Wednesday, as it dropped almost 200 points.

The S&P/TSX composite index closed down 198.93 points, or 1.44%, at 13,610.84. Nine of the 10 TSX main groups posted losses.

The influential financials group fell 0.8% as worries spilled over from the United States on further impact from the credit crunch.

Fitch Ratings said it may cut Wall Street investment bank Merrill Lynch’s debt rating.

In Toronto, Royal Bank of Canada shares fell $1.84, or 4%, to $44.16, and Bank of Nova Scotia dropped $1.29, or 2.7%, to $46.96.

Energy shares, retreated as the price of oil settled just a penny higher after climbing more than US$2 during the session.

Crude for August delivery settled at US$136.05 a barrel on the New York Mercantile Exchange, just 1¢ higher.

The TSX energy sector fell 1.4%. Canadian Natural Resources was down $3.12, or 3.5%, at $85.76, and EnCana fell $2.72, or 3.2%, at $81.18.

The junior S&P/TSX Venture composite index fell 27.21 points, or 1.13%, to finish at 2,372.49.

The Canadian dollar climbed 0.77 of cent from Tuesday’s close to finish at US98.90¢.

In New York, U.S. stocks tumbled, dragging the S&P 500 into a bear market, as worries about more credit losses hurt financial companies and Cisco Systems led technology shares lower.

The S&P closed 20% below its all-time high set in October, making it the last of the three major U.S. stock indexes to fall into a bear market.

The Dow Jones industrial average fell 236.77 points, or 2.08%, to 11,147.44, while the S&P 500 tumbled 29.01 points, or 2.28%, to 1,244.69. The tech-heavy Nasdaq composite index fell 59.55 points, or 2.60%, to close at 2,234.89.

Merrill Lynch shares fell more than 9%, after Fitch Ratings said it may cut the U.S. investment bank’s debt rating, given expected ongoing write-downs and diminished prospects for earnings.

Technology bellwether Cisco Systems saw its shares fall to a new 52-week low after a pair of Wall Street analysts voiced concern about the high-tech giant’s upcoming quarter, which may be pressured by a slowing U.S. economy.