01/14/2015 01:35 EST | Updated 03/16/2015 05:59 EDT

TSX sheds 200 points on weak global growth forecast

The Toronto Stock Exchange dropped 196.96 points late Wednesday afternoon, regaining from an earlier slump as Canadian mining firms were hit by the plunging price of copper.

Capstone Mining, First Quantum Minerals, and HudBay Minerals posted sharp losses between 12 and 23 per cent after the World Bank cut its global growth outlook for 2015. Copper is seen as a proxy for the global economy, because it's the most widely-used metal on earth, a key commodity in construction, manufacturing and electronics.

The bank now sees the world economy expanding just three per cent this year, a 0.4 per cent reduction from its previous forecast. The price of copper, an important industrial commodity, fell nearly six per cent on Wednesday.

'Market correction' underway

Colin Cieszynski, chief market strategist at CMC Markets, said investors are  facing "a pretty serious market correction" that began at the start of the new year.

"The world economy is going through a number of major changes right now, particularly reacting to the steep decline we've had in energy prices over the last few months," said Cieszynski.

"It takes time for people to react to the shorter term impacts in the stock market, but there can be some longer-term benefits as well, such as more money back in the pockets of consumers and businesses. But that takes longer to have a positive effect."

Shares in Suncor Energy were down 0.6 per cent, paring earlier losses after the firm said it would cut about 1,000 jobs in 2015 and delay work on some oilsands and offshore projects in response to falling crude prices.

The Canadian dollar gained slightly against the U.S. dollar to trade at 83.68 cents US in the late afternoon, and the price of West Texas Intermediate crude oil rebounded by up to 6.2 per cent as traders bet the commodity could be oversold.

Canadian bank stocks also fell, as executives said they were stress-testing their portfolios in the face of slumping oil prices. David MacKay, CEO of Royal Bank of Canada, told a conference of bank executives that RBC is considering  the impact of oil prices at U.S. $45 per barrel for an extended period of time. The price of oil has fallen by half in the last six months.

New York stocks also lower

In New York, stock indexes fell on a report from the U.S. Commerce Department that retail sales dropped last month. As of Wednesday afternoon, the Dow Jones industrial average was down more than 190 points, or 1.1 per cent, and the Nasdaq composite index was off by just over 23 points. A disappointing earnings report from banking giant JPMorgan Chase also pushed U.S. stocks down.

Asian and European markets ended the day in the red, as well. In London, the FTSE 100 Index lost 153.74 points, or 2.35 per cent, to close at 6,388.46. In Japan, the Nikkei 225 was down 291.75 points, or 1.71 per cent, closing at 16,795.96.