Portugal cast a long shadow over North American stocks, unnerving investors and sending markets into the red by midday.
The S&P/TSX composite index dropped 96.03 points to 13,176.26, while the TSX Venture Exchange dipped 4.09 points to 2,221.3 amid reports Portugal is facing mounting pressure to accept a bailout.
The Dow Jones industrial average fell 68.49 points to 11,606.27. The Nasdaq composite index lost 13.3 points to 2,689.87 while the S&P 500 index declined 6.15 points to 1,265.35.
Gold rose above $1,370 (U.S.) an ounce as investors sought a safe haven.
Oil prices climbed above $89 a barrel after the 800-mile trans-Alaska pipeline owned by BP PLC and four other companies was shut down because of a leak. Benchmark oil for February delivery rose $1.24 to $89.27 a barrel on the New York Mercantile Exchange.
The Canadian dollar failed to benefit from rising oil prices as traders bought into the safe-haven status of the U.S. currency. The loonie declined 0.34 cent to 100.49 cents (U.S.).
Aluminum giant Alcoa Inc. reports after the market close, kicking off the fourth-quarter earnings season.
European bourses were lower amid the latest developments in the sovereign debt crisis, with London's FTSE 100 index down 0.28 per cent. The Frankfurt DAX was down 1.2 per cent and the Paris CAC 40 slipped 1.58 per cent.
German newspaper Der Spiegel reported that France and Germany are pressing Portugal to tap a European rescue fund to keep the sovereign debt crisis from spreading to much-bigger Spain. Portugal denies it needs to do so. At the same time, the yield on Portugal's 10-year bonds rose nearly half a percentage point to 7.14 per cent.