TSX drops more than 3 percent as global markets tumble

Toronto's main stock index slumped more than 3 percent on Thursday, as rising concerns about global growth more than wiped out the previous session's late-day rally and knocked world markets lower.

Major U.S. stock indexes were also down more than 2 percent, resuming their downturn after a labor market report became the latest datapoint to show the U.S. economy has stalled. .N

Global markets were broadly weaker overnight as investors worried about persistent economic woes in the United States and Europe, while Japan and Switzerland intervened to stem the rise of their currencies against the faltering U.S. dollar.

"There is a great deal of continuing concerns about the economic situation in North America, as well as other places, and people don't have confidence to participate in this market," said Fred Ketchen, director of equity trading at ScotiaMcLeod.

"People are saying: Let's get out and we'll keep our money, and buy again down the road when things look even worse and everything is cheaper."

At 11:13 a.m. (1513 GMT) the Toronto Stock Exchange's S&P/TSX composite index .GSPTSE slid 391.74 points, or 3.06 percent, to 12,424.29.

All 10 of Toronto's main groups were lower, led by the heavyweight energy, material and financial sectors.

The TSX's energy group lost 3.28 percent, stung by a rise in U.S. petroleum inventories and worries about soft demand amid the U.S. and European debt crises and a struggling global economy.

The financial sector was 2 percent lower despite healthy earnings reports by some of Canada's big insurers.

Royal Bank of Canada (RY.TO: Quote), Canada's largest bank, was the most influential decliner, down 2.4 percent at C$50.06, while fertilizer giant Potash Corp (POT.TO: Quote) was in the No. 2 spot, down 4.7 percent to C$52.51.

Suncor Energy Inc (SU.TO: Quote) was also a big laggard, down 3.6 percent to C$33.41.

A slew of positive earnings did little to stem the losses, with both gold miners and life insurers failing to offset the broader weakness.

"If you're looking around for good news, we've got earnings out ... but not even a surprise in the upside on earnings is helping. People have got a very very negative view on everything and they are running to the sidelines," Ketchen said.