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Markets fall after U.S. Fed's gloomy outlook

Fears of a global recession sent the Toronto stock market to its lowest level since August 2010 after the U.S. central bank delivered a blunt warning about worsening economic prospects.

The S&P/TSX composite index tumbled 392.5 points or 3.3 per cent to 11,562.51 after the Federal Reserve warned there are “significant downside risks to the economic outlook.”

The Canadian dollar fell 2.08 cents to 97.33 cents US after going as low as 96.51 cents US, its lowest level in about a year as the Fed’s warning pushed investors to the perceived safe haven status of U.S. Treasury bonds.

New York’s Dow industrials fell 391.01 points to 10,733.83, the Nasdaq lost 82.52 points to 2,455.67 and the S&P 500 index dropped 37.19 points to 1,129.57.

Demand concerns sent oil plunging $5.41 to $80.51 a barrel.