TORONTO (Reuters) - The Toronto Stock Exchange's main index sank nearly three percent yesterday as financial services and commodity-related issues were pulled down by gloomy sentiment from a faltering world economy.

The influential financial services sector dropped 3.8 percent as investor sentiment soured on news that Japan's economy had joined Europe's by slipping into recession, and as the weekend's meeting of the G20 countries produced few concrete stimulus steps.

US-based financial major Citigroup added to the gloom by announcing plans to cut 52,000 jobs.

"There's more to come. We haven't reached the bottom in terms of the bad news," said Stephen Carlin, vice-president of Canadian equities at KBSH Capital Management in Toronto.

Heavily weighted issues that helped drag the TSX lower included Manulife Financial, down 8.8 percent at C$21.06, Royal Bank of Canada, off 2.6 percent at C$43.36, and Toronto-DominionBank , down 3.4 percent at C$51.75.

The S&P/TSX composite index ended down 260.51 points, or 2.88 percent, at 8,795.45 with eight of its 10 main groups lower.

The broader market was also pressured by a slump in commodity-related sectors, said Kate Warne, Canadian market strategist at Edward Jones in St. Louis, Missouri.

"It's continuing worries that the economy is slowing down around the world and, as a result, the demand for commodities is likely to be lower and, no surprise, the prices have dropped in anticipation," Ms Warne said.

The influential energy and materials groups fell three percent and 3.5 percent respectively, as oil dropped $2.09 to settle at to $54.95 a barrel, while gold and base metals also sagged.

EnCana Corp dropped 5.9 percent to C$51.50, while Goldcorp slid 7.5 percent at C$24.25.

Petro-Canada sank 7.1 percent to C$23.95 after it said it would defer its final investment decision on the mining portion of the C$21 billion Fort Hills oil sands project until 2009, citing global economic turbulence and depressed crude prices.

UTS Energy Corp., which also holds a stake in the project, dropped 12.1 percent to 80 Canadian cents. Teck Cominco Ltd., another partner, rose 4.6 percent to C$6.64.

On Wall Street, US stocks fell on concerns of an accelerating global slowdown and Citigroup's job cuts.

The Dow Jones industrial average fell 223.73 points, or 2.63 percent, to 8,273.58, while the Nasdaq composite index ended down 34.8 points, or 2.29 percent, at 1,482.05.