Declining crude oil prices for a third straight day weighed on Canada's resource-linked market, while worries over global growth and the health of the financial sector hurt sentiment after triggering a sell-off in European stocks.

Deterioration in earnings and revenue has become "more broad based," said Manash Goswami, a portfolio manager at First Asset Investment Management Inc, spreading from resource stocks to financials and technology.

Financial sector stocks tumbled 2 percent, including a 2.6 percent drop in Royal Bank of Canada (>> Royal Bank of Canada) to C$69.29.

Brookfield Asset Management Inc (>> Brookfield Asset Management Inc) fell nearly 4 percent to C$38.50. Its bid for Australian freight giant Asciano Ltd (>> Asciano Ltd) has been trumped by local rival Qube Holdings Ltd (>> Qube Holdings Ltd).

The energy group retreated 2.4 percent, including a 3.3 percent decline in Canadian Natural Resources Ltd (>> Canadian Natural Resources Limited) to C$29.22.

U.S. crude prices settled at $29.69 a barrel, down 3.9 percent.

Valeant Pharmaceuticals International Inc (>> Valeant Pharmaceuticals Intl Inc) fell more than 7 percent to C$124.88, while Alimentation Couche-Tard Inc (>> Alimentation Couche-Tard Inc) dropped 6 percent to C$54.52.

The Toronto Stock Exchange's S&P/TSX composite index <.GSPTSE> closed down 228.59 points, or 1.79 percent, at 12,535.40. Nine of the index's 10 main groups were lower.

Defensive sectors, such as utilities, telecommunications and consumer staples have become the focus for Goswami, who is trying to stay away from cyclical stocks.

"I think the trend for the next little while is going to be sideways to down," he added.

Amaya Inc (>> Amaya Inc) fell 2.7 percent to C$18.48. The operator of online gambling website PokerStars said that a special committee of its board has tapped Barclays to review an expected all-cash offer from its Chief Executive David Baazov.

But helping to cushion overall losses, the materials group rose 0.8 percent.

It included gains for gold stocks as the price of bullion rose to its highest level since June last year.

Goldcorp Inc (>> Goldcorp Inc.) advanced 7.3 percent to C$20.52, while Barrick Gold Corp (>> Barrick Gold Corp.) was up 2.5 percent at C$16.59.

(Additional reporting by Alastair Sharp; Editing by Lisa Von Ahn, Diane Craft)

By Fergal Smith