The Toronto stock market's benchmark index plunged almost four per cent on Tuesday, driven by slumping oil prices and negative sentiments about the U.S. mortgage crisis.

The S&P/TSX Composite Index ended the day at 12,146.76, off 487.88 points, or 3.86 per cent.

That performance means that the TSX has lost 1,624 points in the past week and now sits at its lowest point since late January.

"The sentiment is obviously just completely working against the market right now, and no one wants to touch commodities," said Gareth Watson, associate director and Canadian equity adviser at Scotia Capital.

Canada's main stock market tends to benefit when world oil and other commodity prices rise. In recent weeks, however, prices for minerals and energy have been falling, taking the country's equity market lower as well.

In the past week, lower oil prices have dragged down Canada's market, with investors selling out of the commodity-heavy Canadian exchange in search of safer financial havens elsewhere.

Crude oil futures fell to $102.50 US a barrel, down $2.47, on the New York Mercantile Exchange, hitting a five-month low.

US woes

Besides flagging commodities, residual optimism from the U.S. government's bailout earlier this week of its ailing Freddie Mac and Fannie Mae mortgage institutions evaporated.

On Tuesday, for example, the most recent index of U.S. pending home sales, a measure of consumer sentiment, slid 3.2 per cent in July.

In addition, the Congressional Budget Office, a non-partisan agency of the U.S. government, predicted that the federal budget deficit will worsen over the next two years.

"The economy is still struggling, the consumer is still strapped, and we still have more work to do on the housing and credit market mess," said one American analyst.

All this bad news served to drive down the Dow Jones by 280 points, or 2.4 per cent. The index closed Tuesday at 11,230.73.

Back in Canada, all the major subindexes, except consumer products, fell.

Energy stocks were down 6.4 per cent, gold down more than nine per cent, and mining issues slipped almost eight per cent on the day's trading.