Stronger manufacturing data from China and the U.S. Federal Reserve's recommitment on Wednesday to its ongoing stimulus program prevented the fall from becoming steeper.
The Toronto Stock Exchange's S&P/TSX composite index <.GSPTSE> closed down 78.68 points, or 0.61 percent, at 12,747.87, very close to its lowest level of the day and its lowest point since March 14.
The crisis in Cyprus revived questions about the economic health of the broader euro zone and brought into focus the risks investors there must face.
"It reinforces the piece that says the problems in Spain, Portugal, Greece and other locations aren't going away in a hurry," said Robert McWhirter, president and portfolio manager at Selective Asset Management.
The European Central Bank gave Cyprus until Monday to raise billions of euros to clinch an international bailout or face losing emergency funds for its banks.
"If this goes down to the wire, there is some risk to the markets," said Stan Wong, vice president and portfolio manager at Macquarie Private Wealth. "Being a little cautious and holding some cash would make some sense."
Financials, the index's weightiest sector, were down 0.8 percent. Royal Bank of Canada (>> Royal Bank of Canada), the country's biggest bank, slipped about 1 percent to C$60.74, and Toronto-Dominion Bank (>> Toronto-Dominion Bank) fell 0.7 percent to C$83.67.
A sharp fall in oil prices and a 2.5 percent decline in Canadian Natural Resources Ltd (>> Canadian Natural Resources Limited) to C$32.79 resulted in the energy sector losing 1.1 percent.
The industrials sector dropped 1.6 percent. Canadian National Railway Co (>> Canadian National Railway Company) was down 2.5 percent at C$98.84.
The Cyprus worries boosted the appeal of gold as a safe haven and pushed the price of the precious metal to a one-month high. <GOL/>
That helped the index's materials sector, which includes mining stocks, gain 0.5 percent, with gold miners rising 2.2 percent. Barrick Gold Corp (>> Barrick Gold Corp.) added 2.4 percent to C$30.31, and Goldcorp Inc (>> Goldcorp Inc.) climbed almost 2 percent to C$34.24.
Lululemon Athletica Inc (>> Lululemon Athletica Inc) said it expected earnings to drop in the current quarter, hurt by a recall of its workout pants. It also reported results for the quarter ended February 3 that came in slightly ahead of forecasts. Shares of the yogawear retailer were up 1.4 percent at C$66.26.
(Reporting by John Tilak, editing by Peter Galloway)
By John Tilak