Cyber Monday is a Black Monday on the markets

North American markets fell sharply at their opening Monday on more bad economic news from the U.S.

The Dow Jones industrial average was down about 4.9 per cent, or 433 points, at 8,398 by 12:30 pm ET.

The S&P/TSX composite index was off 7.7 per cent, or 716 points, at 8,555.

In Toronto, every sub-index was down, but the energy group plunged more than nine per cent as the price of a barrel of light crude oil fell $4.56 US to $49.87. The drop followed a weekend decision by the OPEC cartel to delay announcing new cuts in oil production in response to low prices.

Other commodities, including metals and gold, also fell.

In the United States, reports on more weakness in manufacturing, drops in construction spending and uncertainty about the willingness of U.S. consumers to spend for the holidays — investors had been hoping for a surge — all contributed to the drops.

The drop Monday followed a week when the markets rebounded. The S&P/TSX index jumped almost 14 per cent last week through the 9,000 level.

Asian and European markets fell Monday as investors paused after last week's rally and digested signs that the U.S. holiday shopping season got off to a modest start over the Thanksgiving weekend.

The declines came despite gains Friday on Wall Street, which notched its first five-day advance since July 2007. Some traders held back ahead of the Institute for Supply Management's November manufacturing survey due later Monday for further clues about the strength of the U.S. economy, a vital export market.

Investors "aren't sure what they're supposed to do at this point," said Tsuyoshi Nomaguchi, a strategist for Daiwa Securities in Tokyo.

India's benchmark Sensex index reversed early gains, falling 2.8 percent to 8,839.87 in the wake of the terrorist attacks in Mumbai that left 172 people dead.

In Tokyo, the benchmark Nikkei 225 stock average lost 115.05 points, or 1.4 percent, to close at 8,397.22 after advancing 7.6 percent last week. Investors sold exporters as the yen strengthened, which erodes their overseas earnings.

Markets in South Korea, Australia and Singapore also fell.

As trading opened in Europe, the FTSE 100 index of leading British shares fell 2.2 percent at 4,192.38. Germany's DAX was 3.1 percent lower at 4,522.98 and France's CAC-40 slipped 2.5 percent to 3,179.71.

Stocks in Thailand reversed early gains as investors weighed prospects that the country's political crisis will be resolved soon. Anti-government protesters have occupied Bangkok's two main airports for nearly a week, cutting off air freight, stranding tourists and crippling the economy. The benchmark SET index fell 2.7 percent to 390.92.

Bucking the trend were Hong Kong and mainland China, where key indices rose on expectations of further measures by the Chinese government to boost the economy after last month's big interest rate cut and anouncement of a multibillion dollar stimulus package.

The Thanksgiving shopping weekend may not have been the disaster some had feared, but unprecedented discounts and tempered buying likely resulted in overall soft sales as a buying binge on Friday quickly fizzled. Now, online retailers are ramping up deals to turn skittish shoppers into "Cyber Monday" spenders.

The term "Cyber Monday," coined by the trade group the National Retail Federation in 2005 to describe the Monday after Thanksgiving, has in the past been the unofficial kickoff for the online shopping season. But with more retailers advertising their deals ahead of time, and as more consumers have high-speed access at home, the day has lost its luster.

Key retail stocks fell on Monday as investors feared that deep discounts offered by U.S. stores during the year's first holiday shopping weekend could sap profits and would not save a bleak season.

Department store operators were badly hurt, with shares of Macy's Inc down 8.8 percent, Saks Inc down 10.7 percent and JC Penney Co Inc down 6 percent.

Apparel chains also suffered, with Abercrombie & Fitch Co down 7.7 percent, Aeropostale Inc down 7.9 percent, and Urban Outfitters Inc down 5.3 percent.

Best Buy Co Inc was down 5.7 percent despite signs that shoppers bought electronics over the "Black Friday" weekend, which kicks off the U.S. holiday shopping season.

Even shares of discounters Wal-Mart Stores Inc, Big Lots Inc and Target Corp fell, though analysts have said they may come out ahead this season as cash-strapped consumers look for bargains.