TORONTO (Reuters) - Toronto Stock Exchange's main index sank to its lowest level in five years yesterday as an earnings warning from Toronto-Dominion Bank pounded the financials group and the price of crude slid below $50 a barrel.

The heavily-weighted financials group plunged 12.2 percent, pulled lower by TD Bank, which announced it would take after-tax charges of C$350 million for credit-trading losses. Earlier this week, Bank of Nova Scotia said it would take after-tax charges of C$595 million.

TD Bank sank 12.7 percent to C$43.57, while Scotiabank fell 13.3 percent to C$30.54.

All the other big Canadian banks had steep losses as worries mounted of more charges to come. Royal Bank of Canada dropped 13.5 percent to C$35.65, and Canadian Imperial Bank of Commerce was down 12.5 percent at C$42.28.

Heavyweight insurer Manulife Financial tumbled 14.8 percent to C$17.86.

"This is a final confirmation, if that was ever needed, that the problems we're seeing in the rest of the world have been affecting the Canadian economy in a big way," said Elvis Picardo, analyst and strategist at Global Securities in Vancouver.

"So far the Canadian banks were the one heavyweight sector that was holding up relatively well compared to its global counterparts."

The S&P/TSX composite index was down 765.80 points, or 9.02 percent, at 7,724.76, its lowest level since November 2003, with all of its 10 main sectors in the red.

The drop was the second biggest ever in percentage terms on the main index, according to TMX Group Inc., which operates the exchange.

The biggest percentage drop, 11.3 percent, was on October 19, 1987.

Also weighing on the index was the energy sector, down 14.5 percent as oil fell below $50 a barrel due to concerns over a deepening global recession.

Canadian Natural Resources dropped 21.5 percent to C$35.43 and EnCana Corp. fell 14.4 percent to C$43.86.

"You've got energy prices down, banks are getting hammered so what's left? A broad concern about the recession in the US and perhaps globally and commodity prices are falling off the cliff, so commodity stocks are being hit as well," Mr. Picardo said.

"All in all it's been a terrible day."

The materials sector was mixed with fertiliser producer Potash Corp. of Saskatchewan down 11.6 percent to C$71.59. Goldcorp was up 6.1 percent at C$24.77.