TORONTO (Reuters) — This past week’s surprise wipe-out on the Toronto Stock Exchange was more a much-needed correction after a record-setting rise than a sign that the bear market is about to wake up from its four-and-a-half-year hibernation.Stock markets from Sydney to New York were hit by a violent sell-off on Tuesday in the wake of a 9-percent fall in Chinese shares. Also, a rapid rally in the yen against the US dollar during the week fuelled concerns that investors were moving out of risky investments they had financed by borrowing in yen.

The rush to safety sent Toronto’s benchmark composite index down 2.7 percent on Tuesday, its biggest one-day plunge in almost three years. The resource-heavy bourse extended losses on Thursday and Friday as ripple effects from the global fall continued to hit Bay Street.

The TSX composite index finished the week down 3.6 percent at a six-week low of 12,863.27.

But analysts said the Toronto market, after beating one record high after another during much of February, was ripe for a correction, just like the one it saw last May. “Everybody was so optimistic and there was so much money flowing in, it was all one-way,” said Sal Masionis, stockbroker at Brant Securities. “The pullbacks are necessary, otherwise you have a very shaky market.”

The main index, where shares of energy and mining companies make up about 40 percent of the overall weight, has been in an almost uninterrupted rally since September 2002, propelled by red hot commodities.

A hiccup came last spring, when fears that global inflation would derail economic growth and dampen demand for commodities knocked the index down 11 percent.

“Myriad global indexes have continually hit new record highs in recent months,” said Matt Blackman, market analyst for www.TradingEducation.com. “The feeling out there was that the bears had become extinct.”

“But we just found out that the longer markets defy gravity, the more severe the ultimate correction,” he said, pointing out that the sharp jump in total capitalisation on stock markets world-wide over the past few years has increased the risk of major swings.