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A currency trader reacts at the foreign exchange dealing room of the Korea Exchange Bank headquarters in Seoul, South Korea, Monday, July 23, 2012. (Ahn Young-joon/AP)
A currency trader reacts at the foreign exchange dealing room of the Korea Exchange Bank headquarters in Seoul, South Korea, Monday, July 23, 2012. (Ahn Young-joon/AP)

At the open: Markets fall fast Add to ...

The Toronto stock market was sharply lower amid concerns that Spain will need a full-scale sovereign bailout while traders took in two major acquisitions in the Canadian energy sector.

The S&P/TSX composite index tumbled 172.13 points to 11,450.78 as the yield on Spain’s benchmark 10-year bond surged to 7.56 per cent.

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The Dow Jones industrial average plunged more than 220 points in early trading.

The price of crude oil dropped more than $3.50 per barrel to below $90, and yields for U.S. government bonds sank to record lows, a sign that traders were seeking the safety of American debt. The euro hit a two-year low against the U.S. dollar.

The Canadian dollar was down sharply Monday morning as traders sold off risky assets amid growing worries that Spain will need a bailout.

The loonie lost 0.48 of a cent to 98.27 cents U.S.

The shifts came as investors left equities and commodities in favour of buying into the safe haven status of U.S. Treasuries.

“The week is off to a challenging start as rising fears over Europe push risk aversion higher,” said Scotia Capital chief currency strategist Camilla Sutton.

Borrowing costs rose sharply for Spain and Italy, a signal of renewed investor worries that the Spanish government will need an international bailout.

Spain's market regulator said it was temporarily banning short-selling of shares on its stock indexes. In a short sale, an investor seeks a profit by betting that the price of a certain stock will fall.

China National Offshore Oil Company is picking up Calgary-based oil and gas producer Nexen for $15.1-billion (U.S.) in cash. And Talisman Energy is selling its 49 per cent interest in U.K. North Sea assets to Chinese firm Sinopec for $1.5-billion.

With files from Reuters, AP

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