The decline came as an unspecified technical glitch halted trading on the New York Stock Exchange for more than half the session.
Trading of NYSE securities on other platforms — including the Nasdaq — were unaffected by the halt. Other North American markets also continued to trade.
Toronto's S&P/TSX composite index plunged 212.43 points to end at 14,412.07, with all sectors lower, while the Canadian dollar was down 0.18 of a U.S. cent at 78.49 cents US.
In New York, the Dow Jones industrial average fell even more, down 261.49 points at 17,515.42, while the Nasdaq plummeted 87.70 points to 4,909.76 and the S&P 500 fell 34.66 points to 2,046.68.
On Wednesday morning, the NYSE sent an alert to users about a "critical issue" with its services and halted trading at 11:32 a.m. ET. Trading resumed at about 3:15 p.m. ET.
The stock exchange, which is the world's largest by market capitalization, didn't explain what caused the outage but said it was internal and not due to a breach of its systems.
Despite the short-term attention focused on technical problems, more important global issues were still the heaviest weight on the markets, said Ian Nakamoto, director of research at MacDougall MacDougall & MacTier Inc.
"The main event is what's going on in China and Greece — this (outage) is an irritant," Nakamoto said.
"It adds to a sour mood."
The pullback on North American exchanges followed another big drop on Chinese markets, which have been on a month-long skid that has wiped out trillions of dollars in market value.
On Wednesday, the Shanghai composite sank six per cent despite new attempts by China's government to stop the selling, among other things ordering state-owned companies to buy shares and promising more credit to finance trading. The Shanghai index has lost a third of its value in the last month, but is still up 70 per cent over the past year.
Hong Kong's Hang Seng, a casualty of the turmoil in mainland Chinese markets, also lost six per cent.
In Europe, Greece rushed to put together a detailed economic reform plan by Thursday, a deadline set by its European creditors.
The creditor countries say they want time to review the plan before leaders of the European Union's 28 countries meet on Sunday in what some say is Greece's last chance to stay in the euro.
On the TSX, energy stocks were down, with the index dropping 2.2 per cent, as the August crude contract pulled back 68 cents to US$51.65 a barrel.
August gold rose $10.90 to US$1,163.50 an ounce.
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