TORONTO -- Panic selling in Asia prompted by developments in China spread across the globe and threw the Toronto stock market into a tailspin Thursday, capping off seven consecutive days of losses and thrusting the index into bear market territory.

The S&P/TSX composite index ended the day off roughly 20 per cent from its all-time high in September 2014 -- a loss considered by many as a bear market.

The index lost 278.59 points, or 2.2 per cent, to close at 12,448.21, as commodity prices, including oil, continued to fall amid perceived weakness in the Chinese economy.

Oil plunged to around levels not seen since 2008, with the February contract for benchmark crude oil losing 70 cents to close at US$33.27 a barrel. That pulled down energy stocks on the TSX by more than four per cent.

In New York, the Dow Jones plummeted 392.41 points to 16,514.10, the S&P 500 lost 47.17 points to 1,943.09, while the Nasdaq declined 146.33 points to 4,689.43.

Andrew Pyle, senior adviser and portfolio manager at Scotia Wealth Management, said it is the worst start to a new trading year for North American markets "in memory."

But concerns about a repeat of the massive losses seen in 2008 are overblown, said Pyle.

"The U.S. economy and the global economy isn't crumbling," said Pyle. "We're not in a global recession. We don't have financial panic on Wall Street. We're having sporadic events create this panic selling that we've seen this week."

The global sell-off came after trading on China's Shanghai and Shenzen stock markets was pre-emptively halted on Thursday for a second time this week after new "circuit breakers" were triggered when a benchmark stock index fell seven per cent.

The circuit breakers also kicked in Monday, the first day of trading since they were introduced on Jan. 1. The China Securities Regulatory Commission said after Thursday's shutdown that the circuit breaker rule had been suspended.

The latest selling was linked to weakness in the yuan, as the government's decision to let the Chinese currency weaken was seen as a bad sign for the health of China's economy, the world's second largest.

Pyle said declines seen over the past few days have been "knee-jerk reactions" to changes happening in China and such losses are unlikely to continue in the coming weeks and months.

"China is going from being a production, manufacturing and exporting powerhouse to a country that is going to become more consumption-based -- in other words, is going to look more like us," said Pyle. "And that transition takes a while, and it doesn't happen smoothly."

The loonie remained near 12 1/2-year lows at 70.94 cents U.S., down 0.08 of a cent.

"The problem in Canada right now is that we've got this ongoing speculation that the Bank of Canada is not done cutting rates," said Pyle. "It's creating a lot more aggressive selling of the Canadian dollar."

In other commodity news, March copper shed seven cents to US$2.02 a pound and the February contract for natural gas rose 11.5 cents to US$2.382 per mmBtu.

One bright spot amid the worldwide rout was the precious metals sector, including gold, which is seen as a safe haven in times of economic uncertainty. The February bullion contract rose $15.90 to US$1,107.80 an ounce.