The Toronto Stock Exchange traded lower again Wednesday as commodity prices fell, and silver had its biggest three-day drop since 1983.

The S&P/TSX composite index closed down 81.05 points, or 0.6 per cent, to 13,611.32 .

The negative session followed a 242-point slide on Tuesday as investors focused on headwinds facing equity markets, including turmoil in the Middle East, a slow American economic recovery, the European debt crisis and surging oil prices that could derail the recovery.

In New York, markets also fell, weighed down as well by unexpectedly weak American jobs data.

The Dow Jones industrial average finished down 83.93 points, or 0.66 per cent, to 12,723.58. The Nasdaq composite index was down 13.39 points to 2,828.23 while the S&P 500 index shed 9.38 points to 1,347.31.

Investors also took in some negative news two days before the release of the U.S. non-farm payrolls report for April. The ADP employment report showed an increase of 179,000 private sectors jobs for the month, which was below consensus expectations for a 198,000 gain.

That may lead economists to lower their expectations for U.S. employment growth in April. The consensus had been for about 185,000 jobs new jobs.

Canada's employment for April also comes out on Friday and is expected to show employers here added 20,000 positions.

S&P/TSX 3-month chart

Sliding oil prices helped push the Canadian dollar lower for a third day against its U.S. counterpart, closing at 104.33 cents US, down .65 of a cent.

Oil fell as a report showed U.S. crude supplies rose more than expected last week, suggesting growth in demand could be waning.

The June crude contract closed on the New York Mercantile Exchange down $1.81 US, or 1.6 per cent, to $109.24 US a barrel.

Traders sold commodities out of concern of slowing global growth, as emerging economies move to cool domestic inflation.

Following another interest rate increase by India's central bank on Tuesday, the People's Bank of China voiced its continued concerns over inflation, stoking speculation that it may raise interest rates again in the months to come.

China has made several moves to tighten monetary policy over the last year to control inflation.

The country's huge demand for oil and metals has been a major source of growth for the resource-heavy Toronto stock market and any suggestion China will make further moves to control prices has usually resulted in a short-term decline in commodity prices.

A 100-ounce silver bar. The Comex has cut how much investors can trade on credit. Darryl Dyck/Canadian Press

July silver fell as much as 8.6 per cent, to $38.94 US an ounce, on the Comex exchange in New York. It closed at $39.388, down $3.197.

Silver, after a big run up in price, has lost ground after the Comex reduced how much of their trades investors can do on credit. It has lost 18 per cent in the last five sessions.

Analysts say investors have been forced to sell other securities to meet higher margin calls.

"So they're selling oil, they're selling other commodities and those other markets are getting hit because of this," said John Kurgan, market strategist at Lind Waldock.

A report in the Wall Street Journal may also have added momentum to the silver sell-off.

The newspaper reported that hedge fund Soros Fund Management sold some of its holdings. It did not identify sources and a spokesman for Soros declined to comment.

June gold retreated 1.6 per cent to close at $1,515.30 US an ounce. Gold reached a record $1,577.57 US an ounce on Monday.

With files from The Canadian Press