The Toronto stock market dropped more than 380 points Tuesday in reaction to financial sector fallout from the U.S. mortgage crisis and a drop in oil and gold futures.

The S&P/TSX composite index closed at 13,316.78, plunging 381.50 points. The key TSX sectors affected are energy, materials and financial services.

U.S. banking giant Citigroup announced a big loss of US$9.8 billion and a further writedown of $18.3 billion over bad mortgage assets.

In Canada, CIBC shares fell $1.87 to $70.20 after it announced Monday that it planned to raise $2.75 billion by selling stock.

The bank confirmed a US$2.46 billion writedown in securities tied to the contracted U.S. housing sector.

"It's very rare for a Canadian bank to raise that amount of money -- almost $3 billion -- to cover a financial problem," Globe and Mail business columnist Derek Decloet told CTV Newsnet.

All the major stocks in the TSX financial sector were down Tuesday, and the TSX Venture exchange went down 48.74 points to 2,769.82.

In the New York markets, the Dow Jones industrials dropped 277.04 points to 12,501.11.

The Nasdaq composite index closed at 2,417.59 -- down 60.71 -- and the S&P 500 index fell 35.3 to 1,380.95.

Adding to the bad news is word that U.S. retail sales were down 0.4 per cent in December. Analysts had expected a 0.1 per cent rise.

In the Middle East, U.S. President George Bush called on Saudi Arabia and other OPEC countries to pump more oil.

Energy stocks were hurt as the market expects a U.S. Dept. of Energy report to show on Wednesday that crude oil supplies rose last week for the first time in nine weeks.

February's crude contract on the New York Mercantile Exchange fell US$2.81 per barrel to $91.39.

For the TSX, the energy price woes accounted for roughly 135 points of the composite index's drop, according to BNN's Michael Hainsworth.

Suncor fell by almost $5 per share, but is still up 17 per cent in the past year, he said.

Decloet said the low energy stocks were a sign of the U.S. economy hitting real problems.

"This is a real recession period in the United States now," he said. "This is why you see oil stocks going, the mining stocks going down -- because they're highly sensitized to world economic growth. As the United States goes, so goes the rest of the world."

Even gold contracts fell $1.60 to US$901.80 per ounce. Major gold producers on the TSX were all down, Hainsworth said.