The S&P/TSX composite index fell 56.59 points to close at 12,412.73.
The Canadian dollar fell 0.44 of a cent to 95.94 cents US.
The TSX financial sector was off 0.7 per cent, pulled down by reports that the U.S. government has accused Bank of America of civil fraud.
Wall Street extended its declines into a third session this week, with the Dow down 48.07 points to 15,470.67, the Nasdaq fell 11.76 points to 3,654.01 and the S&P 500 was down 6.46 points to 1,690.91.
Meanwhile, questions percolate over the timing of the U.S. Federal Reserve's removal of monetary stimulus by tapering off its current bond-buying program.
Comments from Fed officials have been in focus over the past day after two regional presidents said that the central bank could make its moves to slow stimulus in the shorter term, though the exact timing was left to interpretation.
The Fed won't make an official statement until next month, which has put extra weigh on more off-the-cuff remarks.
"The whole reaction to the Fed is overblown because (they have) not said they're raising rates. The Fed said they may start to taper asset purchases down the road," said Paul Vaillancourt, managing director at Fiera Capital in Calgary.
"The economy doesn't need artificial life support anymore, and that's a good news story. Come September, market investors will view it that way. Right now they just need to digest that. Wise investors are making their moves now and getting ready for a big rally in September."
In commodities, December bullion gained $2.80 to US$1,285.30 an ounce, ending six sessions of losses. September copper was unchanged at US$3.18.
The September crude contract on the New York Mercantile Exchange moved down 93 cents to US$104.37 a barrel, following the latest supplies report. The U.S. Energy Information Administration said crude supplies fell 1.3 million barrels for the week ended Aug. 2.
Shares of Athabasca Oil (TSX:ATH) were up nearly 11 per cent after the Alberta Energy Regulator signed off Tuesday on the Dover oilsands project. The move green-lights the Brion Energy Corp. to begin construction, subject to 10 conditions related to the operations of the project.
The Dover project was initially opposed by the First Nations on the Fort McKay reserve lands, but the regulator said that the project would have little impact on the band. Athabasca gained 75 cents to $8.12.
Meanwhile, in earnings, Air Canada (TSX:AC.B) shares rose 25 per cent in early trading after the carrier came in far ahead of analyst predictions with adjusted net income of $115 million in the second quarter. The results marked a big improvement from a year earlier when it reported an adjusted net loss of $7 million. The company's stock was up 53 cents to $2.65.
Valeant Pharmaceuticals International Inc. (TSX:VRX) is boosting its guidance for the year after turning out a $11 million profit from a loss in the same period a year earlier. Sales were up nearly 34 per cent to $1.1 billion. Valeant shares increased $2.12 to $101.70.
High Liner Foods Inc. (TSX:HLF) says it recorded a profit of US$9.9 million in the second quarter, up from $1 million a year ago as lower raw material costs offset a decrease in sales volumes. The frozen seafood company reported sales of US$204.9 million for the quarter, down slightly from US$216.8 million in the same period last year. Shares rose 6.9 per cent, or $2.15, to $33.50.
In the U.S., shares of Ralph Lauren, Marathon Oil, First Solar and Zillow all fell after reporting earnings or issuing profit forecasts that disappointed investors.Suggest a correction