The S&P/TSX composite index fell for a third session, down 61.15 points to 12,212.42 while the TSX Venture Exchange dropped 25.66 points to 1,302.15.
The Canadian dollar was off 0.22 of a cent to 101.97 cents US.
New York indexes were also negative even as the U.S. Federal Reserve said that stronger housing markets helped boost economic growth at the end of the summer in nearly every region of the United States.
The Dow Jones industrials racked up a second consecutive triple-digit loss, falling 128.56 points at 13,344.97.
The Nasdaq shed 13.24 points at 3,051.78, and the S&P 500 index edged down 8.92 points to 1,432.56.
The Fed noted in its most recent regional survey that the economy "expanded modestly" across all 12 districts during September.
But CIBC World Markets senior economist Peter Buchanan noted that in contrast, "the August Beige book used the slightly stronger term 'moderate' for three of the 12 districts, implying some slight softening in momentum in several districts."
Markets were firmly in the red all day after Alcoa predicted after the close Tuesday that aluminum demand would grow six per cent this year, down from seven per cent in the previous quarter, primarily because of slower growth in China.
The aluminum producer is viewed as a broad economic bellwether as its products are used in a wide variety of industries, from vehicles to appliances.
Alcoa shares were down 4.6 per cent as the company kicked off the start of the third-quarter reporting season by posting a loss of US$143 million, largely on one-time charges, while adjusted results beat estimates. Revenue of $5.83 billion also beat expectations.
On top of that, the International Monetary Fund on Tuesday reduced its growth forecast for the world economy to 3.3 per cent this year from its previous estimate of 3.5 per cent.
Expectations for third-quarter earnings have been ratcheted lower because of global growth concerns. Analysts expect earnings for Standard & Poor’s 500 companies to be lower than a year ago, the first time that has happened in almost three years.
"However, when you look at it from a glass half-full standpoint, the bar has been set really low," said Allan Small, senior adviser at DWM Securities Inc.
"And that could lend itself to some beating of expectations."
Small added that he’s looking ahead to Friday when the big banks start to report in order to get more clarity on earnings.
"Corporate earnings really don’t start until Friday when JPMorgan Chase and Wells Fargo report and that’s going to be the first indicator of the health of the U.S. banking sector, which is a huge factor in the stock market and the emotions of investors in the U.S. and that gets carried around the world," he said.
The energy sector led decliners, down one per cent as the November crude contract on the New York Mercantile Exchange gave up early gains, declining $1.14 to US$91.25 a barrel on diminished demand prospects.
The Organization of the Petroleum Exporting Countries lowered its forecast for global oil demand in 2012, and said that world oil demand will grow by 800,000 barrels a day in 2012, down 100,000 barrels from its previous forecast. Canadian Natural Resources (TSX:CNQ) fell 56 cents to C$29.80 while Cenovus Energy (TSX:CVE) gave back 52 cents to $33.68.
The base metals lost 0.8 per cent as the IMF also downgraded growth prospects for China while December copper was unchanged at US$3.72 a pound. Taseko Mines (TSX:TKO) gave back 11 cents to C$3.01 while Teck Resources (TSX:TCK.B) declined 56 cents to $29.90.
Losses spread to most sectors with the financials down 0.6 per cent as Scotiabank (TSX:BNS) shed 41 cents to $53.37 and Sun Life Financial (TSX:SLF) stepped back 30 cents to $23.27.
The gold sector limited TSX losses, rising about 0.75 per cent as December gold inched up a dime to US$1,765.10 an ounce. Kinross Gold Corp. (TSX:K) gained seven cents to C$10.25.
Shares in AuRico Gold Inc. (TSX:AUQ) were up 21.4 per cent to $7.60 after the company said it was selling its troubled Ocampo mine and other assets to a company owned by Mexican billionaire Carlos Slim for US$750 million. AuRico president and chief executive Scott Perry said the deal would strengthen the company’s balance sheet and allow AuRico to focus on its two core assets, the El Chanate mine in Mexico and the Young-Davidson gold mine in northern Ontario.
In other corporate news, pharmacy chain franchisor Jean Coutu Group (TSX:PJC.A) said its quarterly net profit was $51.2 million or 23 cents per share. That compared with $66.4 million or 20 cents per share in the comparable year-earlier period when it recorded an unusual gain on the sale of U.S. assets. Revenue for its fiscal 2013 second quarter rose to $658.7 million from $635.2 million and the Quebec-based company's shares were up four cents to $14.57.
Bauer Performance Sports Ltd. (TSX:BAU) is buying team uniform maker Inaria International for $7 million. The hockey and lacrosse equipment company said the deal will help expand its business to include uniforms and its shares were down 11 cents to $10.84.