January 20, 2016 4:42 pm
Updated: January 20, 2016 5:04 pm

Stock markets recover from steep dive, but still end day lower

WATCH: Stephen Poloz, governor at the Bank of Canada, said Wednesday it could well take three years for economy to adjust to reality of lower oil prices. 

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TORONTO – The plunging price of oil wreaked havoc on global stock markets Wednesday, with major indexes in North America sliding sharply, adding to big losses in Europe and Asia, before regaining some — but not all — ground.

At the close,the Toronto Stock Exchange’s S&P/TSX composite index was down 159.1 points or 1.33 per cent at 11,843.67. The index plunged more than 400 points earlier in the trading day, a sharp declined in line with drops on other exchanges.

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The lower close on the TSX extended an almost unbroken string of losses since the Christmas break that have lowered Canada’s main market to levels not seen since August 2012.

Markets in New York were also down sharply, with energy companies leading the decline as the March contract for benchmark crude oil fell $1.19 to US$28.38 a barrel.

MORE: Latest coverage — plunging oil

The Dow Jones industrial average, off well over 500 points earlier in the day, ended the session down 247 points or 1.54 per cent at 15,769.00. The S&P 500 closed down 21.91 points or more than 1.1 per cent and the Nasdaq lost 5.27 points or 0.12 per cent.

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Rate on hold

The commodity-sensitive loonie was poised to make a gain for the first time in more than two weeks, trading up 0.12 of a cent at 68.81 cents U.S. That came as the Bank of Canada decided to hold its trendsetting policy rate at 0.5 per cent.

Analysts had speculated there was a 50-50 chance the central bank might cut in order to stimulate an economic recovery.

MORE: Bank of Canada ‘optimistic’ about economy, stands pat on interest rates

In Europe, Germany’s DAX closed down 2.8 per cent while France’s CAC-40 and Britain’s FTSE 100 were both off 3.5 per cent.

In Asia, Japan’s Nikkei index fell 3.7 per cent and is now in bear territory, down 20 per cent from its peak in June. The Hang Seng in Hong Kong lost 3.8 per cent, while China’s Shanghai composite shed one per cent of its value.

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