The S&P/TSX composite index pulled back 166.67 points to 14,576.45, led by drops in resource stocks as oil prices fell well below the US$90 a barrel threshold.
The Canadian dollar was down 0.32 of a cent to 89.52 cents US.
The Dow Jones industrials dropped 272.52 points to 16,719.39, the Nasdaq declined 69.6 points to 4,385.2 while the S&P 500 index dropped 29.72 points to 1,935.1.
Concerns grew that Germany's economy may not rebound as expected in the third quarter as data showed a four per cent drop in industrial output during August. It was the biggest monthly drop in industrial production in five years. It also came on the heels of another report Monday showing that German factory orders dropped 5.7 per cent in August from the previous month.
Also, the World Bank said developing countries in East Asia Pacific will see slightly slower economic growth this year. It said growth will come in at 6.9 per cent this year and next, down from 7.2 per cent in 2013. It added that the pace of growth in the region will pick up next year but not in China.
The World Bank said Chinese growth will ease slightly to 7.4 per cent this year and 7.2 per cent in 2015.
Also, the International Monetary Fund trimmed its outlook for global economic growth this year and next, mostly because of weaker expansions in Japan, Latin America and Europe.
"It's part of a bigger trend we're seeing clear signs of weakness for both Europe and Asia in general with data that has been steadily deteriorating now for a few quarters," said Jean-Francois Dion, portfolio adviser at wealth management, RBC Dominion Securities.
"And it stands in pretty stark contrast to the U.S., which is posting much healthier growth numbers."
Meanwhile, investors will take in earnings this week from big multinationals including Alcoa and PepsiCo. Traders expect a slowing pace in earnings growth and wonder how a stronger U.S. currency will impact the earnings of companies that make a big chunk of profits overseas.
Canadian quarterly earnings tend to lag the U.S. by a few weeks and investors will particularly be focused on the resource sector, especially since oil tumbled 13.5 per cent during the July-September period, copper fell six per cent and gold dropped 8.35 per cent.
"We have had a sharp correction in the price of many resources and commodities and we will have to see how that plays out in terms of numbers for a lot of these companies," Dion said.
The TSX energy sector fell 1.9 per cent as the November crude oil contract in New York dropped $1.49 to US$88.85 a barrel, its lowest close since April, 2013.
The December copper contract was unchanged at US$3.04 a pound and the base metals sector shed 3.35 per cent.
The gold sector was down about three per cent while the December gold contract was up $5.10 to US$1,212.40 an ounce.
All other TSX sectors contributed to the losses, save for the utilities sector which netted a 0.85 per cent gain.Suggest a correction