Investors also digested monetary policy commentary from the Bank of Canada. The Canadian central bank dropped any reference to taking a neutral stance on interest rates, having already signaled it would generally not give forward guidance on rate moves.

Canada's capital was jolted by the fatal shooting of a soldier and an attack on the parliament building in which gunshots were fired outside a room where Prime Minister Stephen Harper was speaking. The gunman in the parliament building was shot dead, and Harper was safely removed.

“Investors hate uncertainty, and this introduces an element of uncertainty that was not seen before," said Elvis Picardo, strategist at Global Securities in Vancouver. “Investors may be on tenterhooks over the next little while, wondering if there is more to come.”

He added that the fallout in the market would be limited if this turned out to be a one-off event.

The benchmark index had rebounded in the previous four sessions after hitting an eight-month low last week.

"I think today's market decline is a normal market consolidation after a significant bounce off a bottom," said David Cockfield, managing director and portfolio manager at Northland Wealth Management. "The events in Ottawa could also be having an impact on market psychology."

The Toronto Stock Exchange's S&P/TSX composite index <.GSPTSE> closed down 235.64 points, or 1.62 percent, at 14,312.07. All of the 10 main sectors on the index were in the red.

Financials, the index's most heavily weighted sector, fell 1.1 percent. Royal Bank of Canada (>> Royal Bank of Canada) lost 0.8 percent to C$79.46, and Bank of Nova Scotia (>> The Bank of Nova Scotia) dropped 1.7 percent to C$66.77.

Shares of energy producers shed 3.3 percent, reflecting a 2.6 percent drop in the price of U.S. crude oil . Suncor Energy Inc (>> Suncor Energy Inc.) gave back 2.5 percent to C$37.90, and Talisman Energy Inc (>> Talisman Energy Inc.) was down 4.4 percent at C$7.38.

(Editing by James Dalgleish)

By John Tilak