TORONTO - Stock markets are deep in the red as investors look at another figure put forward on the value of toxic assets on banks' balance sheets and the market steadies itself for potentially grim earnings reports.

Toronto's S&P/TSX composite index was also impacted by lower oil prices and fell 177 points to 8,839.2.

The TSX Venture Exchange is 10.49 points lower to 952.68 while the Canadian dollar has inched up 0.01 of a cent to 80.75 cents US.

New York's Dow Jones industrials were down 200.1 points to 7,775.7. The Nasdaq composite index has shed 45.26 points to 1,561.45 while the S&P 500 index is off by 19.6 points at 815.9.

The dismal performance on markets put the four-week-old spring rally on hold for a second day. It has boosted the TSX almost 17 per cent and the Dow about 19 per cent.

Nervousness has set in ahead of the start of corporate earnings reports, kicked off by aluminum giant Alcoa Inc. after the close.

Alcoa, the first Dow component to post quarterly results, is expected to report a loss for the period, setting the tone for potentially more dismal results to come. Analysts and investors don't anticipate the reports to be good, but are hoping that they at least meet or exceed already low expectations. Special attention will be paid to earnings forecasts for the rest of the year.

"This quarterly earnings thing is going to have a significant bearing on where at least we go in the short term," said Fred Ketchen, manager of equity trading at Scotia Capital.

Also, a report that the International Monetary Fund was set to forecast US$4 trillion in toxic assets on banks' books weighed on markets around the globe. Published by London-based paper The Times, the report underscored investors' fears that the government's recent efforts to purge banks of troublesome loans might not work.

"US$4 trillion is an awful lot of money," added Ketchen.

"They were talking about something more in the area of $2.5 trillion or $3 trillion. All of a sudden now it's $4 trillion - and what else is lying around the corner that we don't know about at the present time?"

Meanwhile, the Canadian Institute of Chartered Accountants says no changes have yet been made to mark-to-market valuation in Canada, despite new rules announced last week in the United States.

The accounting standards board is expected to make a decision that could allow banks and other institutions with devalued assets to artificially boost their worth on the market.

The TSX financial sector, up 35 per cent over the course of the rally, moved down 2.5 per cent. Royal Bank (TSX:RY) declined 91 cents to C$37.29 while Manulife Financial (TSX:MFC) lost 47 cents to $16.24.

The energy sector lost 2.65 per cent as the May crude contract on the New York Mercantile Exchange gave back $1.65 to US$49.40 a barrel. EnCana Corp. (TSX:ECA) gave back $2.72 to C$52.16 and Canadian Natural Resources (TSX:CNQ) surrendered $1.87 to $51.62.

The June bullion contract on the New York Mercantile Exchange rose $10.50 to US$883.30 an ounce, sending the gold sector three per cent higher. Goldcorp Inc. (TSX:G) rose 82 cents to C$38.22.

The base metals sector stepped back four per cent as Teck Cominco Ltd. (TSX:TCK.B) gave back 43 cents to $7.97.

Equinox Minerals Ltd. (TSX:EQN) shares fell 32 cents or 14.75 per cent to $1.85 after it said Monday it plans to raise about $160 million in an equity financing to fund the expansion of its Lumwana copper mine in Zambia.

Empire Co. Ltd. (TSX:EMP.A), the owner of grocer Sobeys, said Monday that it has signed a deal with a syndicate of underwriters led by Scotia Capital Inc. to raise $125 million. The company said the underwriters have agreed to purchase, on a bought-deal basis, 2.5 million non-voting class A shares at a price of $49.75 per share. Its shares fell $5.08 to $49.70.

Shares in security firm Garda World (TSX:GW) jumped 22 cents or 13 per cent to $1.93 after it said Tuesday it has won an extension of its contract to provide passenger and baggage security screening operations at 26 airports in Canada.

The Montreal-based company said the two-year extension is worth about $300 million in revenue

Shares in Canadian auto parts makers were lower even as Ottawa announced that help is on the way for the sector.

Industry Minister Tony Clement said Ottawa will provide an additional $700 million to Export Development Canada, a Crown corporation, which will be able to use the funds to insure accounts receivable at the suppliers.

Clement also told a news conference that Canadians need to be prepared for a possible filing under bankruptcy protection laws by General Motors, North America's largest auto maker.

Magna International (TSX:MG.A) declined $2.15 to $38.92 while Linamar Corp. (TSX:LNR) backed off 21 cents to $2.79.