Continued concerns about a slowdown in the global economy's recovery spooked financial markets Tuesday.

The Toronto stock market fell as commodity prices retreated on data showing a sharp revision downward in growth prospects for China.

An investor looks at a board showing a stock index at a brokerage house in Hefei, in central China's Anhui province, on Tuesday. The benchmark Shanghai Composite Index plummeted 4.3 per cent to close at 2,427.05, a 14-month low. (Associated Press)

The S&P/TSX Composite Index closed down 343.17 points, or 2.96 per cent, to 11,263.83.

New York indexes also fell, with the Dow Jones industrial average down 268.22 points, or 2.65 per cent, to 9,870.30.

The Nasdaq composite index lost 85.47 points, or 3.85 per cent, to 2,135.18, while the S&P 500 index during the session touched its lowest level for the year at 1,040.78. It closed down 33.30 points, or 3.1 per cent, to 1,041.24.

Investors were rattled after the U.S. Conference Board, a private research group based in New York, said late Monday that a calculation error led it to incorrectly state its economic leading indicator for China for the month of April.

It said the gauge of future economic growth was up only 0.3 per cent, rather than the 1.7 per cent it had initially stated.

Strong growth from China has so far been the engine for global economic recovery.

'You clearly have the world economy slowing.'—John Stephenson, First Asset Funds

The Conference Board also said Tuesday that its U.S. consumer confidence index dropped almost 10 points to 52.9, down from the revised 62.7 in May. Economists surveyed by Thomson Reuters had been expecting the reading to dip slightly to 62.8.

"You clearly have the world economy slowing, the problems in Europe are not going away, and you wonder where growth is going to come from if China isn't growing quite as fast as we thought," said John Stephenson, portfolio manager at First Asset Funds.

"And that is, of course, very negative for the commodity complex, which is selling off hard and dragging our index down today. But it's broadly speaking very negative."

Chinese demand for oil and minerals has been particularly beneficial for the resource-stock-heavy Toronto market.

With commodities cut off as a place to hide, traders moved into U.S. government treasury bills, pushing up the American dollar. The yield on two-year U.S. treasury bills dropped to a record low, below 0.61 per cent.

Loonie trading below 95 cents US

The Canadian dollar lost 1.78 cents to $94.76 cents US. The euro was trading down 0.87 cents at $1.2190 US.

The August crude oil contract on the New York Mercantile Exchange fell $2.31 to $75.94 US a barrel.

The August bullion contract rose $3.80 to $1,242.40 US an ounce.

In Europe, Britain's FTSE 100 stock index was down 3.1 per cent, while Germany's DAX was 3.3 per cent lower and France's CAC-40 was down 4.0 per cent.

In Asia, the Shanghai Composite Index dived 4.3 per cent to a 14-month low while Japan's benchmark Nikkei 225 stock index lost 1.3 per cent and Hong Kong's Hang Seng retreated 2.3 per cent.

With files from The Canadian Press