TORONTO: Canadian stocks sank nearly 2 percent on Tuesday, their biggest drop in four weeks, on lowered expectations for more US central bank stimulus, weak commodities and a steep drop in shares of Royal Bank of Canada .
RBC was the most influential decliner, down 3.1 percent to C$56.93 following a lawsuit filed on Monday by US regulators that accused Canada's biggest bank of running a trading scheme "of massive proportion."
The bank also announced it would buy the 50 percent stake in custody joint venture RBC Dexia that it does not already own from Banque Internationale ? Luxembourg, or BIL, for 837.5 million euros ($1.1 billion).
Financials were down 1.5 percent, materials plunged 3.2 percent and energy shares lost 1.9 percent.
Stocks extended earlier broad-based losses after minutes from the latest US central bank meeting showed Federal Reserve policymakers appear less keen to launch a fresh round of monetary stimulus as the US economy improves.
"The market got excited about the prospect that the Fed might provide further hints towards quantitative easing and it didn't get that, so there's been a backlash because of that and we're seeing asset markets in general sell off," said Fergal Smith, managing market strategist at Action Economics.
At 3:39 p.m. (1929 GMT), the Toronto Stock Exchange's S&P/TSX composite index was down 200.72 points, or 1.6 percent, at 12,306.34. Earlier, the index hit a low of 12,284.61, marking the TSX's biggest one-day losses since Mar. 6.
Other heavy laggards included gold and energy shares as bullion and oil prices fell in the wake of the Fed minutes. Goldcorp Inc plunged nearly 6 percent to C$43.09, Barrick Gold lost 3.3 percent to C$42.41 and Suncor Energy was down 1.8 percent to C$32.62.
Research in Motion tumbled 9.3 percent to C$12.92, after a Dutch semiconductor company said it had filed a patent infringement suit against the troubled BlackBerry maker.