TORONTO - The Toronto stock market tumbled Friday as a fifth-straight month of job creation in Canada was trumped by a U.S. employment report that widely missed expectations and made it clear that the economic recovery isn't picking up the momentum that investors have been counting on.

The S&P/TSX composite index fell 242.27 points to 11,569.61, while the TSX Venture Exchange lost 18.25 points to 1,464.92.

Statistics Canada reported that 24,700 jobs were created in May. Economists had expected a modest increase of 15,000 after almost 109,000 jobs were created in April.

But the news from south of the border was a huge disappointment as the U.S. Labour Department reported that 430,000 jobs were created last month versus the 517,000 that analysts had expected. Private sector job creation came in at just 41,000.

"Most of the jobs added last month were for the (2010) census," observed Serge Pepin, director of investments at BMO Investments.

"Businesses are still not definitely committed to hiring or to adding to their payroll books at this point," Pepin said. "I think they need to be a little more convinced that, yes, we have definitely turned the corner, and I think that what's happening in Europe is really sort of putting a dark cloud on things."

The jobs data sent New York's Dow Jones industrial average tumbling 324.06 points to 9,931.22.

Adding to the letdown were fresh worries about European government debt, this time centred around Hungary, which sent the Canadian dollar lower, the euro to a four-year-low below the key US$1.20 mark and pushed investors to the safe haven zone of U.S. Treasuries.

The Canadian currency was down 1.76 cents at 94.28 cents US.

Markets were already rattled before the release of the jobs data after a spokesman for Hungarian Prime Minister Viktor Orban was quoted as saying his country's economy is in a "grave situation." That raised worries of a government debt default, sent the Hungarian forint down sharply and pushed the euro, to which it is linked, down to US$1.1959 late Friday afternoon.

Dismay about finances in Hungary hit bank stocks because "there are also emerging concerns about the European banking system in particular," said Mark Chandler, fixed income strategist at RBC Capital Markets.

"The biggest holders of sovereign debt over there are the core banks of France, Germany, Spain and so on. And as a result, increased writedowns on that would pressure funding in those banks."

The TSX financial sector was down 2.6 per cent with Scotiabank (TSX:BNS) down $1.95 at $49.23 and Royal Bank (TSX:RY) off $1.23 at $53.54.

The stronger American dollar and demand worries also pushed commodity prices, a key driver of the Toronto Stock Exchange, lower.

The TSX energy sector slipped 2.32 per cent as the July crude contract on the New York Mercantile Exchange lost $3.10 to US$71.51 a barrel, its biggest single day drop since early February. Suncor Energy (TSX:SU) fell 83 cents to C$32.46 and Canadian Natural Resources (TSX:CNQ) dropped $1.22 to C$36.54.

The base metals sector lost 5.43 per cent as the July copper contract in New York fell 13 cents to a five-month low of US$2.82 a pound. Teck Resources (TSX:TCK.B) stepped back $2.35 to C$32.77 while Quadra FNX Mining (TSX:QUX) was 92 cents lower to $11.95.

Railway stocks fell alongside commodity shares, taking the industrials sector down 2.35 per cent. Canadian National Railways (TSX:CNR) declined $1.59 to $59.99 while Canadian Pacific Railway (TSX:CP) shed $1.56 to $58.06.

Gold stocks were lower even as the August bullion contract on the Nymex gained $7.70 to US$1,217.70 an ounce.

Elsewhere in New York, the Nasdaq composite index lost 83.86 points to 2,219.17 while the S&P 500 index was down 37.95 points to 1,064.88.

Markets have been under selling pressure for weeks now after a debt crisis that started with Greece morphed into worries about the effect of massive spending cuts by heavily-indebted countries on global economic growth -- and concerns about whether the euro currency itself can survive.

The TSX ended the week down 0.87 per cent while the Dow shed 2.3 per cent. However, the Toronto index is down 5.8 per cent from its 2010 highs registered in late April while the Dow Jones industrials is down 11.3 per cent.

In other economic news, Statistics Canada also reported that the value of building permits rose 5.4 per cent to $6.7 billion in April. That followed a 12.3 per cent advance in March.

On the corporate front, units in RioCan Real Estate Trust (TSX:REI.UN) drifted 42 cents lower to $18.64 as its chief executive said the company is in a unique position to take advantage of opportunities in the real estate market, particularly in the United States, as the economy recovers. Edward Sonshine told the company's annual meeting that the trust will take advantage of low interest rates and real estate prices that are down by as much as 25 per cent in the U.S.

Western Coal Corp (TSX:WTN) shares were down 26 cents to $4.82 after it said it will extend the life of its Willow Creek mine in northeastern British Columbia, due to an 88 per cent increase in estimated coal reserves to 29.6 million tonnes.

Noveko International Inc. (TSX:EKO) says its subsidiary Magnum Pharmaceutics Inc. has voluntarily filed for bankruptcy. Noveko shares fell seven cents to 60 cents.