The continuing rout on China's main market prompted a worldwide sell-off Monday that sent North American markets into a tailspin in early trading before recovering somewhat by the end of the day.
The market's benchmark S&P/TSX index plunged 768 points or 5.7 per cent in early trading, then rallied strongly before sliding again.
Canada's main index finished the day at 13,052.74 points - down 420.93 points from Friday's close.
The loonie fell 0.54 of a U.S. cent at $75.40.
It was the same story in New York, where the Dow Jones industrial average lost a breathtaking 1,000 points shortly after the open before regaining much of that ground, then faltering again to close down 588.47 points at 15,871.28.
The S&P 500 index was down 77.68 points at 1,893.21 and the Nasdaq dropped 179.79 points to 4,526.25.
On commodity markets, the October contract for benchmark crude oil was down $2.21 at US$38.24 a barrel, while September natural gas was off three cents at US$2.65 per thousand cubic feet.
December gold was down $6.00 at US$1,153.60 an ounce and September copper fell five cents to US$2.26 a pound.
On commodity markets, the October contract for benchmark crude oil was down $1.43 at US$39.01 a barrel, while September natural gas was off a penny at US$2.66 per thousand cubic feet. September copper fell five cents to US$2.26 a pound.
China's largest stock market, the Shanghai composite index, fell 8.5 per cent to close at 3,209.91 points, its biggest one-day loss since an 8.8 per cent decline on Feb. 27, 2007. That had a major spillover effect in Europe, where Germany's DAX fell five per cent, the CAC-40 in France slid 5.6 per cent and Britain's FTSE 100 dropped 4.5 per cent.
Underlying the gloom in China is the growing conviction that policy-makers and regulators may lack the means to stop the losses amid an economic slowdown, a banking system short of cash and investors pulling money out of the country.
“There is a lot of fear in the markets,” said Bernard Aw, market strategist at IG.
The panic has underscored the scale of the challenge for Chinese leaders in seeking to curb excess investment and guide the economy toward a more sustainable pace of growth.
“My biggest concern is that global growth momentum is very fragile,” said Rajiv Biswas, Asia-Pacific chief economist for IHS. “The most important step is to see China take further action to try to bring their economy to a seven per cent growth path.”
Major U.S. market indexes also fell sharply.
The Dow Jones industrial average was down a breathtaking 1,000 points shortly after the open before regaining some ground, losing 204.38 points to fall to 16,255.37. The broader S&P 500 index was down 29.25 points at 1,941.64, while the Nasdaq was 48.80 points lower at 4,657.24.