12/12/2014 04:41 EST | Updated 12/12/2014 04:59 EST

TSX, Dow Jones Plunge As Oil Hits New Lows, Worries Grow About China's Economy

Spencer Platt via Getty Images
NEW YORK, NY - AUGUST 01: Traders work on the floor of the New York Stock Exchange (NYSE) on August 1, 2014 in New York City. Following a huge sell off yesterday, the Dow opened down over 20 points in morning trading. (Photo by Spencer Platt/Getty Images)

TORONTO — The Toronto stock market closed sharply lower as oil retreated well below the US$60-a-barrel level following another indication of weakness in the world's second-biggest economy and a revised forecast from the International Energy Agency.

The S&P/TSX composite index dropped 173.22 points to 13,731.9.

The IEA cut its forecast for global oil demand growth by 230,000 barrels a day, to 900,000.

That revision and data showing Chinese industrial production declined for a third straight month in November sent January crude in New York down $2.14 to a fresh, five year low of US$57.81 a barrel.

Crude has retreated 18 per cent this week and analysts are unable to say where the price bottom will be.

The Canadian dollar fell 0.33 of a cent to 86.42 cents US.

In New York, the Dow Jones industrial average closed more than 300 points lower, its worst loss in two months.

Traders were discouraged Friday by another slump in the price of oil and more signs of weakness in China.

The Dow dropped 315 points, or 1.8 per cent, to 17,280. The Dow had its first losing week since October.

The S&P 500 fell 33 points, or 1.6 per cent, to 2,002. The Nasdaq slid 54 points, or 1.2 per cent, to 4,653.

Bond prices rose. The yield on the 10-year Treasury note fell to 2.09 per cent.

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