Stocks in Canada and the United States fell sharply Tuesday as worries about a deteriorating U.S. housing market renewed concerns about consumer spending and the economy.

The S&P/TSX composite index slid 222.56 points and closed at 13,264.87.

S&P/TSX composite index 3-month chart

The sell-off was broadly based, with every sector down on the TSX. Mining stocks, financials, energy and materials took the biggest hits.

The Dow Jones industrial average plunged 280.28 points to close at 13,041.85.

On Tuesday afternoon, the U.S. Federal Reserve released minutes of its Aug. 7 policy meeting at which the Fed governors warned that the slumping U.S. housing market, a growing credit squeeze and stock market turbulence had increased risks to the economy.

The stock market sell-off accelerated immediately after the release of the Fed report.

The market sentiment soured early in the day with the release of consumer confidence figures in the U.S., which said consumer sentiment in August took its steepest slide since Hurricane Katrina in 2005.

Another report said U.S. house prices fell 3.2 per cent in the second quarter compared with the same quarter a year earlier. That was the biggest decline in 20 years.

The Canadian dollar fell almost a full cent to close at 93.89 cents US.

On Monday night, the deputy governor of the Bank of Canada made comments that were widely interpreted as saying the central bank would not be raising interest rates at its next policy meeting Sept. 5.

"Given recent events in global credit markets, we need to assess the extent to which the risks around our July projection have shifted," deputy governor Pierre Duguay said.