Commodities and financials stocks took massive hits today, as JP Morgan’s quick purchase of Bear Stearns on Sunday fanned the flames around recession talks and fear of further casualties spread.

By early afternoon, the TSX was down 448.23 points, or 3.38%, as bank stocks tumbled on concern about the continued affects of the exposure to the weak housing market in the U.S.

“We are in the midst of the most pervasive financial crisis in a generation, which has destroyed untold sums of wealth in housing and financial assets and has driven the U.S. economy into recession,” said BMO chief economist Sherry Cooper, in a commentary. “The implications for a further slowdown in the U.S. and global economies and for declines in the U.S. dollar are playing out in real time.”

The financials sector was down 3.10%, as CIBC shares were off 6.09%, down $3.65 at $56.25. The other major banks weren’t faring much better, with Royal Bank of Canada shares down 3.89%, or $1.77, at $43.75 and TD Bank Financial shares were down 3.39%, or $2.08, at $59.21.

As well, The Bank of Nova Scotia fell 3.11%, or $1.37, to $42.71 and the Bank of Montreal shares sank 3.61%, or $1.45, to $38.72.

Commodities issues pulled markets down all morning, and by early afternoon the materials group was down 2.96%, with gold sub-index down 1.61% and base metals down 4.75%.

Goldcorp shares were down 3.10%, or $1.39, to $43.49. Potash Corp. shares were off 3.09%, or $4.89, at $153.25 and Teck Cominco fell 5.15%, or $2.19, to $40.29.

U.S, stocks see-sawed this afternoon, after heavy losses this morning were slightly recovered and the Dow hovered around the waterline after lunch, down 0.13%, or 15.03 points, at 11,936.03.

The S&P 500 was down 15.77 points, or 1.22%, at 1,272.37 and the tech-heavy Nasdaq was off 38.19 points, or 1.73%, at 2,174.30.

On Sunday, JP Morgan bought Bear Stearns for US$2 a share in stock after the ailing Bear needed an emergency bailout due to a massive liquidity crisis. Bear Stearns stock had traded up around $30 a share the Friday before the sale.

Meanwhile, on the other side of the pond, European markets also tumbled. The FTSE 100 sank 3.9%, or 217.3 points, to close at 5,414.4, its lowest close since late 2005.