The Toronto stock market took a massive hit of more than 600 points Monday, its largest single-day loss in seven years, as analysts showed concern about economic troubles south of the border.

The S&P/TSX composite index fell 4.74 per cnet, or 605 points. Last week's losses of 6.6 per cent had already wiped out the TSX's entire gains for 2007.

"When you factor in what's been happening since Tuesday, it's an almost 12-per-cent slide," BNN's Michael Hainsworth told CTV Newsnet.

"We have shaved more than 1,500 points off the TSX composite index so far."

Monday's loss took about $90 billion off the market's value, weakening the value of stocks that millions of Canadians hold in their pension plans or mutual funds.

The Canadian dollar fell to its lowest point since September, ending the day at 96.81 cents US, down 0.52 of a cent.

"It's all about emotion and the emotions are pretty negative right now," said Hainsworth. "Over at ScotiaMcLeod, Andrew Pyle, a strategist there, said we're close to erasing three out of every four dollars we've made since the bull run of June 2006."

In other economic news, Statistics Canada reported that rising auto sales helped drive a 0.3 per cent gain in wholesale sales in November. Otherwise, sales would have fallen 0.6 per cent.

The Bank of Canada is expected to cut its key rate by a quarter point on Tuesday, reducing it to four per cent. The move is designed to help protect Canada's economy from its slowing U.S. counterpart.

Patti Croft, vice-president of Philips, Hager and North Investment Management Ltd., told Newsnet she expects to U.S. Federal Reserve to aggressively cut rates in the near future.

Investors not buying Bush stimulus package

Monday's trading comes in the wake of an announcement from U.S. President George Bush on Friday, during which he detailed a fiscal stimulus package worth US$145 billion.

Congress would have to approve the plan, but investors have been signalling that they think the plan might not do enough to prop up the U.S. economy, which is suffering major problems in its housing and credit markets.

Investors have expressed concerns over the health of the U.S. financial system and believe Bush's response to the problem is too vague.

The U.S. markets were closed Monday because of the Martin Luther King Jr. national holiday.

In Asia, the Nikkei 225 index in Japan closed at 13,325.94 -- a two-year low. China's Shanghai Composite index dropped 5.1 per cent. Investors are worried that Chinese banks might be exposed to risky U.S. mortgage investments.

Markets were also down in India and Hong Kong. The latter's Hang Seng Index fell 5.5 per cent to 23,818.86 -- the worst percentage decline since 9/11.

In Europe, London's FTSE 100 index fell 323.5 points to 5,578.2 -- a drop of 5.5 per cent.

Frankfurt's DAX 30 dropped 523.98 points or 7.15 per cent to 6,790.19. The Paris CAC 40 also took a hit, going down 347.95 points or 6.8 per cent to 4,744.45.

"We would like to know if there is going to be some kind of fed action, immediate rate cuts of something, or will the selling wave continue?" said Christoph Schmidt, an analyst at N.M. Fleischhacker Trading Bank in Frankfurt.

"Because of all this fears and this worries the market won't come into a quiet mode, there's still a lot of action there."

Croft said people should remember that stocks are forward-looking mechanisms and that if the Fed does cut rates, the markets should bottom and then begin rebounding.

"Do have that longer-term perspective. There's incredible volatility, but opportunity awaits as well," she said.

With files from The Canadian Press