The TMX Broadcast Centre in TorontoFrank Gunn/The Canadian Press
The Toronto Stock Exchange sank into the red at the open Wednesday as commodity prices lost ground amid negative investor sentiment.
The S&P/TSX commodity index fell 83.28 to 12,173.9.
The Canadian dollar fell 0.26 of a cent to 101.72 cents US as commodity prices failed to get a lasting boost from reports of improved consumer confidence in Canada and the United States.
A U.S. consumer confidence index reached its highest level since February in September while its Canadian equivalent has reached its highest level since July 211.
Wall Street markets were also lower, with the Dow industrial average down 0.07 points to 13,457.48, the Nasdaq fell 9.97 points at 3,107.76 and the broader S&P 500 index down 4.25 points to 1,437.34.
Meanwhile, the benchmark New York oil contract was $1.10 lower at $90.27 a barrel, the December gold contract slipped $17.40 to 1,749 and the December copper contract fell five cents to $3.71.
Traders focused on how the European economic crisis has led to social unrest in the most vulnerable countries, such as Greece and Spain.
Tens of thousands of protesters took to the streets in Athens and Madrid, where they clashed with riot police ahead of a new round of spending cuts and tax hikes.
"Europe has come back to the forefront this week in the absence of any other major news," said Colin Cieszynski, senior market analyst, CMC Markets Canada.
"The economic calendar remains very quiet and it appears that the bulls which had appeared so strong earlier in the month, have appeared to step back and await new developments."
The Bank of Spain warned that the country is in a deep recession, one day after protests in Madrid led to at dozens of arrests and injuries. The central bank of Spain said the country's economy continues to shrink "significantly."
In Greece, there were reports of violence as anti-government protests turned violent Wednesday. Police clashed with protesters hurling petrol bombs and bottles in central Athens..
In the United States, there was mixed results in the housing sector. Sales of new homes dipped slightly in August from July but the median price of homes sold during the month rose by a record amount.
The U.S. Commerce Department says that new-home sales edged down to a seasonally adjusted annual rate of 373,000 in August, a dip of 0.3 per cent from July's rate of 374,000. That had been the fastest pace since April 2010 when government tax credits were boosting sales.
Markets had been enjoying a fairly buoyant period ever since the Fed joined other central banks in turning on the stimulus taps in the hope of helping global growth.
In Canadian economic news, the Conference Board of Canada said consumer confidence showed improvement this month, following a weak showing in August. The Ottawa-based economic forecaster says its Index of Consumer Confidence increased 6.7 points to 82.2.
And in Canadian deals, Onex Corp. (TSX:OCX) is leading a $718-million deal to acquire a 4,000-employee German manufacturing company, the first European investment for the Toronto-based company's flagship private equity fund. Onex shares fell 14 cents to $37.93.
The main U.S. subsidiary of CGI Group (TSX:GIB.A) has received a five-year contract worth up to US$871 million from the Defense Information Systems Agency. CGI Federal Inc. will deliver a range of technology and business services, including engineering, scientific, testing, and logistics. Shares dropped 25 cents to $26.58.
Investment manager AGF Management Ltd. (TSX:AGF.B) said Wednesday it lost $13.3 million or 14 cents per share in the quarter ended Aug. 31 compared with a profit of $15.4 million or 16 cents per share a year ago. Revenue totalled $119.8 million, down from $151.4 million. Shares fell 7.8 per cent or 97 cents to $11.46.
And shares of Research In Motion Ltd. (TSX:RIM) gained 4.3 per cent or 28 cents to $6.78 on positive momentum from Tuesday when the company gave an update on the new BlackBerry 10 prototype and ahead of its quarterly earnings to be released Thursday.
In Europe, Germany's DAX was 1.8 per cent lower while the CAC-40 in France fell 2.2 per cent at 3,447. The FTSE 100 index of leading British shares was down 1.4 per cent.
Earlier in Asia, Japan's Nikkei 225 stock average closed down 2 per cent at 8,906.70 and Hong Kong's Hang Seng dropped 0.8 per cent to end at 20,527.73. South Korea's Kospi shed 0.6 per cent to 1,980.44. China's Shanghai Composite Index shed 0.6 per cent to 2,004.17.