TORONTO (Reuters) - Toronto Stock Exchange's main index sank to its lowest level in four years yesterday in a broad sell-off led by key resource and financials issues on gloomy news from the banking sector.

Financials, which comprise about one third of the index's total weighting, slid 4.9 percent after Bank of Nova Scotia said late on Tuesday it would take a C$890 million pretax charge in the fourth quarter because of sliding securities valuations in volatile markets.

The Scotiabank warning raised questions about how much other Canadian banks will have to write down to account for their exposure to troubled assets. Scotiabank is set to kick off Canadian banks' earnings season on December 2.

"There's still writedowns going on so people are wondering where this financial crisis is going to end," said Lex Kerkovius, senior research analyst at McLean & Partners Wealth Management Ltd., in Calgary.

"What everybody is focusing on now is not so much the writedowns from the initial phases of what's happened with the mortgage markets. They're looking at phase 2, the losses in consumer loans, commercial and business loans."

The S&P/TSX composite index closed down 345.17 points, or 3.9 percent, at 8,490.56, its lowest level since September 2004. Its previous 2008 low was 8,537.34, hit in late October.

Scotiabank sank 5.2 percent to C$35.24, while Canadian Imperial Bank of Commerce fell 5.1 percent to C$48.29. Elsewhere in the sector, Royal Bank of Canada dropped 5.4 percent to C$41.19, and Manulife Financial fell 6.2 percent at C$20.97. Scotiabank's writedown followed US-based Citigroup's announcement earlier this week that it would slash 52,000 jobs globally in a bid to restore its financial health.

More broadly, the benchmark index's retreat reflects general economic weakness. "You've got pretty soft economic numbers across the board so you've got very negative sentiment at the moment," said Bob Gorman, chief portfolio strategist at TD Waterhouse.

The energy group was off 3.8 percent as oil prices fell to $53.62 a barrel on a weak demand outlook amid a slowing economy, and rising crude oil inventories.

Gold prices gave back earlier gains and pressured the broader materials group, which dropped 4.3 percent. Barrick Gold Corp. rose 2.9 percent at C$26.49, but Agnico-Eagle fell 11.9 percent to C$33.08 on stock dilution fears after it said it will raise US$252 million in a private placement.

On Wall Street, US stocks plunged to their lowest levels since 2003 as investors fretted over a prolonged economic downturn and a faltering US auto industry.

The Dow Jones industrial average tumbled 427.47 points, or 5.07 percent, to 7,997.28, while the Nasdaq Composite Index ended down 96.85 points, or 6.53 percent, at 1,386.42.