North American markets were plunging Thursday on new fears about the European economy and worries that the debt crisis might be shifting to the United States.

Oil prices were down as gold continued to climb well over $1,800.

The Canadian dollar is down amidst the uncertainty.

European markets fared worse as they closed, facing their biggest daily drop in two and a half years. The FTSE 100 was down 4.6 per cent and the DAX lost 6.0 per cent.

“The market is beginning to price in a recession. The Philadelphia Fed number was an absolute abomination,” Michael Hewson, market analyst at CMC Markets, told Reuters.

The Philly Fed dropped to -30.7, its weakest level since early 2009, wrote Jay Feldman, the director of economics at Credit Suisse Securities U.S., in a note.

"If the Philly Fed numbers prove to be indicative of national activity trends, then a recession likely began in August," Mr. Feldman noted.

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