Canada's political leaders exchanged salvos on the campaign trail Monday over each other's economic proposals, as fears over the stability of major U.S. financial institutions rattled global markets.

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Conservative Leader Stephen Harper has portrayed his party as prudent stewards of Canada's economy amid global uncertainty. ((Tom Hanson/Canadian Press))

Monday's trading saw stocks plummet on both sides of the border, as well as in Europe and Asia, following a dual shock from Wall Street that investment bank Lehman Brothers was filing for bankruptcy protection and struggling Merrill Lynch would be sold to Bank of America in a $50-billion US takeover.

Speaking in Ottawa, Conservative Leader Stephen Harper downplayed the potential of a recession despite the market turbulence, while again touting his government's record in handling the Canadian economy.

"There are and there will be difficulties in the world economy," Harper told reporters during a campaign appearance. "At the same time, Canada is not in the same situation as the United States.   

"My own belief is if we were going to have some kind of big crash or recession, we probably would have had it by now."

He said Canada's economy and its housing, government and financial sectors all have solid fundamentals.   

Harper also took the opportunity to repeat his fierce criticism of Liberal Leader Stéphane Dion's Green Shift carbon tax plan, which proposes a tax on carbon emissions to pay for income tax cuts and other benefits.

"Obviously, this is a time that requires a great deal of prudence," Harper said. "This is not a time for wild experiments in new taxes or grand new spending schemes."

Dion: Tories let booming economy 'hit a brick wall'

Speaking in St. John's on Monday, Dion said Canada's economic growth had slipped to among the lowest of the G8 nations under the watch of Harper, who has a "record of economic mismanagement that has not been matched since Brian Mulroney."

Dion said despite its troubles, the United States's first six months of this year have been better than Canada's in terms of economic growth.

"Stephen Harper has allowed what was a booming economy to hit a brick wall," Dion said. "[He] made bad choices regarding the way he spent. He spent more than any other government before him, but he built nothing with it."

The Liberal leader said the income tax cuts provided under the Green Shift plan would stimulate the economy in key areas, while Harper's "gimmicks" would pull Canada closer to a recession.

He said the Green Shift plan would create jobs in the green economy of the future and wean Canada off its reliance on oil.

"Stephen Harper governs for the next day, the next poll. He wants to buy your vote with gimmicks for the next election."

Harper won't stand up for small investors: Layton

Meanwhile, NDP Leader Jack Layton said Canadians, especially retirees and small investors, want to ensure their prime minister is monitoring the companies entrusted with their money.

"Of course with Mr. Harper, we don't see any willingness to really address the need to stand on behalf of Canadian consumers," he told reporters in Halifax on Monday. 

"He won't even support the notion of the monitoring of gas prices, let alone the kinds of initiatives that really should be taken here in Canada to make sure that the consumers of investment products are being protected."

With files from the Associated Press