The S&P/TSX composite index was down 57.38 at 14,812.42 after an almost 60-point loss Thursday and a triple-digit drop Wednesday. The Canada dollar was also weaker, down 0.82 U.S. cents at 79.37 cents.
Chris King, portfolio manager at Morgan, Meighen and Associates, said the financials sector was pulled down by foreign investors shorting the stocks of Canadian banks.
"The short interest has really grown over the last little while," said King. "Some people are anticipating that between real estate and energy corrections, the financials are going to take a bruising, and that's why they're shorting them."
All three of the stock exchange's most heavily weighted sectors declined Friday, led by energy, which was down 0.91 per cent to 216.57 points.
"The last couple days we had some support in the oil sector, largely because of the potential for geopolitical events in the Middle East, particularly Saudi Arabia and Yemen," said King. "Now, today, oil's backing off a little so we're a little weak on the energy side."
The May crude oil contract was down $2.56 at US$48.87 a barrel on the New York Mercantile Exchange, after advancing for five straight sessions.
Financials declined 0.85 per cent to 242.87 while metals and mining was down 0.75 per cent to 676.39.
The April gold bullion contract was down $5 at US$1,199.80 an ounce.
In the U.S., markets were positive, with the Dow Jones industrial average up 34.43 points at 17,712.66, the Nasdaq 27.86 points higher at 4,891.22 and the S&P 500 advancing 4.87 points to 2,061.02.
Meanwhile, shares of BlackBerry (TSX:BB) were up 2.76 per cent to $11.92 after the smartphone maker reported a small profit in its latest quarter. The company earned US$28 million or five cents per share in the quarter compared with a loss of US$423 million or 80 cents per share a year earlier.
Shares in Bombardier (TSX:BBD.B) were down one cent to $2.50 after the company announced that entry into service of its new CSeries commercial aircraft would be delayed 2016.
South of the border, Federal Reserve chairwoman Janet Yellen said the U.S. central bank could begin gradually raising its key interest rate later this year thanks to continued improvement in the U.S. economy.