TORONTO — North American stock markets were splashed with red once again on Thursday as caution over the economy showed up in corporate earnings and outlook estimates for next year.

The deepening concern was felt across all of the markets, but none moreso than on Wall Street where the Dow Jones industrial average crumbled almost five per cent on the day -- pushing it down nearly 10 per cent over the last two sessions.

Toronto's S&P/TSX composite index fell more than three per cent, or 331.79 points, to close at 9,555.41 on broad weakness highlighted by further declines in major commodities.

The Canadian dollar closed at its lowest level of the day, down 1.7 cents to 83.92 cents US. The loonie has dropped 2.95 cents since Tuesday.

The TSX energy sector was down 6.8 per cent. Crude oil receded seven per cent, or $4.53, to close at US$60.77 on the New York Mercantile Exchange.

TSX gold stocks dropped 6.6 per cent with the December bullion contract on the New York Mercantile Exchange tumbling $10.20 to end at US$732.20 after heading nearly $19 higher earlier in the session.

Iamgold Corp. reported a third-quarter profit of US$18.8 million or six cents per share, down from a year-earlier US$19.5 million or seven cents per share. Its shares lost 10 per cent, or 45 cents, to $3.89.

The TSX Venture Exchange lost 31.29 points to 920.13

On Wall Street, the Dow Jones industrial average slipped 443.48 points to 8,695.79. It was the first time the Dow had fallen below 9,000 points in more than a week.

The Nasdaq composite index dropped 72.94 points to 1,608.70 while the S&P 500 moved down 47.89 to 904.88.

The widespread decline comes amid weak U.S. retail sales and employment data, adding to anxiety about a deep American recession spreading worldwide.

The U.S. Labor Department said new claims for unemployment benefits dipped by 4,000 to a seasonally adjusted level of 481,000, but jobless claims above 400,000 are considered recessionary levels, and have run above that figure for 16 weeks.

Better-than-expected sales at Wal-Mart Stores Inc. provided one of the few bright spots, as the world's largest retailer benefited from a consumer focus on basics. But most other U.S. stores, particularly mall-based apparel merchandisers, reported steep sales drops.

A warning by Cisco Systems Inc. aggravated investor worries. The world's largest maker of computer networking equipment said late Wednesday that orders fell off sharply last month, indicating that the weak economy and tight credit markets are hurting many companies.

And News Corp., the global media empire run by Rupert Murdoch, reported a 30 per cent decline in quarterly profit.

Financials lost 0.38 per cent as Manulife Financial Corp. arranged a $3-billion loan line from the six biggest Canadian banks to bolster its capital, while reporting its third-quarter profit was cut by half to $510 million, eroded by sliding stock markets and a hit from credit losses. Manulife stock dipped 45 cents to $25.35.

Investment dealer Canaccord Capital Inc. suspended its dividend while reporting a summer-quarter loss of $5.4 million, down from year-ago earnings of $15.3 million. Revenue was down 30 per cent at $110.8 million. Canaccord shares fell 9.3 per cent, dropping 59 cents to $5.76.

GMP Capital Trust was up nine cents to $5.01 despite disclosing it is cutting distributions by more than half, eliminating 37 employees and trimming executive salaries by 10 per cent after a 43 per cent slide in third-quarter revenue to $74.8 million.

Earnings were stronger at two of Canada's biggest retailers, last month.

Canadian Tire Corp. third-quarter profit rose 6.3 per cent increase to $108.6 million as its retail sales grew 7.3 per cent. Its stock rose 68 cents to $45.98.

Shoppers Drug Mart Corp. says increased sales of prescriptions and other products pushed up its third-quarter revenues by 9.8 per cent to $2.8 billion. Net income rose to $162.5 million for the 16-week period ended Oct. 3, up from $141.7 million a year before. Company shares were down 22 cents to $47.45.

Canadian Natural Resources Ltd. said it earned $2.84 billion or $5.25 per share in the latest quarter -- quadruple the year-ago bottom line of $700 million or $1.30 per share, sending its shares down $1.30 to $49.84.

The Bank of England slashed its benchmark interest rate by 1.5 percentage points to three per cent. The size of the cut jolted financial markets which had expected at most a one-point reduction.

The European Central Bank quickly followed by cutting its policy rate by half a point, and the Swiss National Bank also cut its key rate by half a point.

While equity markets have generally responded favourably to central bank interest rate cuts this year, the latest market reaction suggests that sometimes there can be too much of a good thing, said Colin Cieszynski, a market analyst at CMC Markets Canada.

"This selloff suggests that the U.K.'s big rate cut may have had the opposite effect of what may have been intended," Cieszynski wrote in a note.

"Instead of increasing confidence that central banks are working to get the global economy going, this move may instead have raised fears that central banks may be panicking, that central bankers may know something that the street doesn't and that economic conditions may be even worse than has currently been discounted."

AbitibiBowater Inc. shares dropped 13 per cent, or 32 cents, to $2.09. The company reported a third-quarter net loss of US$302 million, $5.23 per share, on sales of $1.7 billion.

Canadian Satellite Radio Holdings Inc. shares dropped 25 per cent, or 35 cents, to $1.05 after the company reported its annual net loss narrowed and revenues rose as the Toronto company continued to grow its satellite radio business.

Biovail Corp. reported third-quarter net income of $48.4 million, down 27 per cent from $65.9 million a year earlier, as revenue declined to $181.1 million from $188.9 million. Shares were up a penny to $10.70.

Toyota Motor Corp., which had been riding high on the success of its Prius hybrid and Camry sedan, says it expects its earnings for this fiscal year will be less than a third of last year's profit and its lowest annual total in eight years.