Slumping oil stocks sent the S&P/TSX composite index tumbling on Tuesday, but U.S. markets had a strong day.

The benchmark index of the TSX fell 261.26 points to close at 11,526.13. It was the biggest percentage drop for the index in almost four months.

Resource sectors took the biggest hits, but every industry group was in negative territory.

The gold group fell more than six per cent as December gold futures dropped more than $21 US to $576.30 US an ounce. 

Barrick Gold was down $2.50 to $32.10; Goldcorp fell $1.82 to $24. 

Traders said gold prices retreated because of a big decline in crude oil prices. The oil drop reduced gold's appeal as a hedge against inflation.

Oil prices hit 8-month low

The energy group was off 5.3 per cent as November crude futures traded at $58.68 US a barrel — an eight-month low — down $2.35 US. Traders say inventories remain very high and the market remains worried that a slowdown in the global economy will curb the demand for commodities.

EnCana dropped $2.84 to $49.15; Petro-Canada slid $2.70 to $41.91.

The Canadian dollar, which often moves in tandem with commodity prices, shed almost half a cent to 89.20 cents US.

Base metals stocks also pulled back as copper, nickel and aluminum futures fell. Copper producer Teck Cominco fell $2 to $67.50.

Shares of gambling software maker CryptoLogic continued to fall after recent moves by the U.S. government to restrict the ability of Americans to use online gambling sites. CryptoLogic stock dropped 87 cents to $19.

The Dow Jones industrial average hit a record intraday high and ended the day with a record high close, too.

Slumping oil prices are seen as a net positive for Wall Street, as the Dow has a smaller weighting in energy stocks than the TSX. Traders say lower oil prices generally mean higher corporate profits and lower inflation.

The Dow gained 56.99 points to close at 11,727.34.

The Nasdaq composite index added 6.10 points to close at 2,243.70.