The Toronto stock market tumbled more than 200 points mid-morning Tuesday as commodity prices retreated amid worries that Greece could be edging closer to default.
The S&P/TSX composite index fell 207.67 points or 1.75 per cent to 11,652.99 while the TSX Venture Exchange declined 54.91 points to 1,342.51.
The Canadian dollar fell 0.78 of a cent and below parity to 99.92 cents (U.S.) as traders avoided risky assets, including commodity-based currencies such as the loonie.
Instead, they opted for the perceived safe haven of U.S. Treasuries after Greece's main parties were unable to form a government following an indecisive weekend election.
Voters punished the two parties that have overseen the country's harsh austerity measures and left no party with enough votes to form a government. Now, another election looks increasingly likely for the country, which is being supported by bailouts.
But analysts warn that Greece could run out of money as soon as next month without a government to negotiate the next level of its financial bailout.
Adding to market unease were comments from the head of Greece's Radical Left Coalition, which came a surprise second in Sunday's election. Alexis Tsipras called upon Greece's two main party leaders to renege on their support for the multibillion-euro international bailout that is keeping Greece afloat.
U.S. markets also retreated with the Dow Jones average down 194.85 points at 12,813.68.
The Nasdaq composite index slid 56.82 points to 2,900.94 and the S&P 500 index fell 21.59 points to 1,347.99.
Commodity prices lost ground because if Greece can't stay solvent, it risks falling out of the euro zone, with potential knock-on effects throughout the global economy.
As it is, the economies of many heavily indebted euro zone countries are worsening as tough austerity measures adopted to rein in spending are crushing growth.
“It highlights the bigger issue, which is that Europe has made some meaningful progress in addressing the capital issues of the banking system and reinforcing the banking system,” said Norman Raschkowan, North American strategist at Mackenzie Financial Corp.
“But they haven't made the transition from the focus on austerity to the focus on growth and you can't cut your way to prosperity.”
Commodities have also suffered in recent weeks because of indications of slowing economic performance in the U.S. and China.
The TSX energy sector lost 2.2 per cent as the June crude contract on the New York Mercantile Exchange fell $2.21 to $95.73 (U.S.) a barrel, its lowest level since late December. Crude has slumped about 10 per cent since the beginning of the month on a deterioration of the global growth outlook. Canadian Natural Resources gave back 95 cents to C$30.69 and Suncor Energy was 66 cents lower at $29.56.
Copper prices are also down sharply from May 1, losing almost four per cent. The July contract was down 11 cents on Tuesday to $3.66 (U.S.) a pound. Copper is viewed as an economic bellwether as it is used in so many industries. The base metals sector gave back almost four per cent and Teck Resources declined $1.53 to $32.81 (CAN) while Ivanhoe Mines lost 47 cents to $9.88.
Railway stocks fell alongside commodity prices and mining stocks, with Canadian National Railways down $1.31 to $82.74 and Canadian Pacific Railway off $1.53 at $72.96.
The gold sector was also down almost four per cent as bullion prices also backed off, down $38.40 to $1,600.70 (U.S.) an ounce. Goldcorp Inc. faded $1.31 to $34.62 (CAN) and Barrick Gold Corp. shed $1.35 to $36.32.
Blue chips also contributed to the negative showing with the financial sector down 0.85 per cent. Scotiabank lost 50 cents to $53.09 and TD Bank eased 97 cents to $80.68.
Shares sank nearly seven per cent on the Athens Stock Exchange on Monday, and dropped a further 4.4 per cent Tuesday to the lowest level since 1992.
European markets were lower Tuesday with London's FTSE 100 index off 0.5 per cent, Frankfurt's DAX down 0.93 per cent and the Paris CAC 40 dropping 1.99 per cent.
On the corporate front, Research In Motion gained nine cents to $11.84 as the BlackBerry maker hired two veterans from the mobile computing industry for the key roles of chief operating officer and chief marketing officer. Kristian Tear, who joins RIM from Sony Mobile Communications, where he served as executive vice- president, will be the new COO. Frank Boulben, the former executive vice-president of strategy, marketing and sales for LightSquared, will serve as CMO.
There was also plenty of earnings news to digest.
Food company George Weston Ltd. said first-quarter net earnings attributable to shareholders grew 18 per cent to $124-million from $105-million in the quarter a year earlier. Sales increased one per cent to $7.22 billion from $ 7.15 billion a year ago but its shares dipped 38 cents to $60.10.
Molson Coors Brewing Co. reported net income from continuing operations fell 3.9 per cent to $79.4-million (U.S.), or 44 cents per share. But underlying earnings rose to $85.3-million, or 47 cents per share. Net sales were up 0.1 per cent to $691.4-million. Its shares fell 75 cents to $41.29 in New York
Yellow Media Inc. plunged 3.5 cents or 35 per cent to 6.5 cents amid a first-quarter loss of $2.9-billion as the struggling directory publisher wrote down the value of its assets. The company also cancelled its annual meeting planned for Tuesday in Montreal after it said the number of shareholder votes received would not be enough to reach a quorum. Revenues were $289.1-million compared with $349.4-million for the first quarter in 2011. Excluding the one-time charge, the company earned $57.5-million.