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A man stands next to an electronic display showing the Hang Seng Index figure in Hong Kong, China, on Wednesday, July 8, 2015.Jerome Favre/Bloomberg

The TSX fell and U.S. stocks dropped, as a plunge in Chinese equities raised concerns about a broader impact on global economic growth.

Raw-materials, financial and technology shares were among the worst performers, similar to yesterday before equities staged a sharp reversal.

In Toronto, the S&P/TSX composite index fell 125.4 points, or 0.86 per cent, to 14,499.11.

The Canadian dollar was down, at 78.58 cents (U.S.).

Alcoa Inc. slid 2.8 per cent before its earnings report after the market closes. Bank of America Corp. and Citigroup Inc. sank more than 1.6 per cent. Yahoo! Inc. and Intel Corp. slumped at least 1.8 per cent.

The Standard & Poor's 500 Index fell 1 per cent to 2,058.86 in New York, after rising 0.6 per cent Tuesday. The Dow Jones Industrial Average lost 190.5 points, or 1.1 per cent, to 17,586.44 The Nasdaq Composite Index declined 62.76 points, or 1.3 per cent, to 4,934.70.

"People are getting pretty nervous now," said Ross Yarrow, director of U.S. equities at Robert W. Baird & Co. in London. "My clients are starting to get more concerned about China than they were about Greece. Just think of the sheer size of China's stock market – it's losing multiple times the value of Greece's GDP almost every day. China has the potential to have a material effect on global fundamentals."

Asia's benchmark gauge headed for its steepest drop in two years after China's stock rout spread as another round of government support measures failed to allay concern that margin trades will keep unwinding at a record pace.

Equity futures earlier pared losses of as much as 1.5 per cent after Greece requested a three-year loan from the European Stability Mechanism. European leaders on Tuesday ordered Greece to present economic proposals to get new aid, setting a Sunday deadline for the country to accept a rescue package or face expulsion from the euro.

The Global X FTSE Greece 20 ETF, an exchange-traded fund tracking Greek stocks, slipped 1.5 per cent. Greek banks and the stock market will remain shut through Friday.

The S&P 500 fell the most in three months last week as the escalating crisis in Greece diverted attention from U.S. economic data and the path of the Federal Reserve's monetary policy. The equity benchmark gauge was down 2.3 per cent through Tuesday since its May record.

Minutes from the Fed's June meeting due at 2 p.m. may offer more perspective on the central bank's assessment of the economy. A Morgan Stanley index shows the central bank will delay raising rates until next year, amid Greece's turmoil and plunging prices for commodities and Chinese stocks. The International Monetary Fund yesterday reiterated its view that the Fed should wait until the first half of 2016 to act.

Corporate earnings will also bring investors more data to consider. Results from Johnson & Johnson, JPMorgan Chase & Co. and Intel Corp. are all due next week. Profit at S&P 500 companies contracted 6.5 percent in the second quarter, analysts' estimates compiled by Bloomberg show.

"I think what's really important for earnings season is not so much what happened in the second quarter, but what the guidance looks like," said John Canally, chief economy strategist at LPL Financial Corp. in Boston. "Is there impact from disruptions in China? Is there impact from the European economy? We're going to be watching those two things really closely."

The Chicago Board Options Exchange Volatility Index added 12 per cent to 17.95, after falling 5.4 per cent yesterday. The gauge, known as the VIX, rose 20 per cent last week, the most since January.