The Toronto stock market fell sharply as traders digested disappointing Chinese manufacturing data and word Wednesday that the U.S. Federal Reserve thinks it may be time to wind down some stimulus spending.

The S&P/TSX composite index tumbled almost 300 points to 11,968.57 after Fed chairman Ben Bernanke said the central bank's bond purchases will likely slow down this year and into 2014. The Fed has been buying $85 billion US worth of bonds each month to keep long-term interest rates low.

The Canadian dollar was down almost an entire US cent to 96.39 cents US after the close of trading, and commodity prices retreated.

'Virtually every financial asset has been sold.'—Mike Ingram, market strategist

Precious metals were hit hard. Gold tumbled to its lowest level in almost three years, shedding 6.4 per cent to trade at $1,286.20 US an ounce by end of day.

Crude oil was down 2.9 per cent, and finished at $95.40 a barrel in New York, its biggest loss since November.

"What we're seeing is a pretty significant sea-change in investor strategy," said Alex Young, global equity strategist at S&P Capital.

U.S. indexes were also firmly in negative territory as the Dow industrials fell almost 354 points to 14,758.32. Those losses came a day after the Dow lost more than 200 points on Wednesday.

The Nasdaq fell almost 79 points to 3,365 and the S&P 500 index lost almost 41 points to 1,588.19.

"The tide of red now engulfing my screens is indeed impressive in its breadth," said Mike Ingram, market strategist at BGC Partners. "Virtually every financial asset has been sold. Equity, credit, bonds, commodities; all have suffered."

The bond market is also swept up in the pessimism. The yield on the 10-year U.S. government bond rose to 2.41 per cent on Thursday, the highest level since late 2011.

With files from The Canadian Press and The Associated Press