The TSX suffered its biggest loss since February on Friday, slumping to a five-week low as higher bond yields in major economies pressured global stock and commodity markets.

Higher bond yields came after the European Central Bank on Thursday kept its policy stance unchanged and after comments by Federal Reserve officials that hinted at a U.S. interest rate hike, while the Bank of Japan is studying several options to steepen its yield curve.

The perception that major central banks are reluctant to use more monetary stimulus to depress bond yields has reduced liquidity in global markets and triggered higher volatility, said Matt Skipp, president of SW8 Asset Management.

North Korea conducted its fifth and biggest nuclear test on Friday, adding to risk aversion.

Global developments overshadowed stronger-than-expected domestic jobs data. Canada's economy added 26,200 jobs in August, recovering some of the positions lost in recent months.

The Toronto Stock Exchange's S&P/TSX composite index closed down 263.26 points, or 1.78 per cent, at 14,540.00. All of the index's 10 major groups ended lower.

For the week, the index fell 1.7 per cent.

U.S. crude oil futures settled US$1.74 lower at US$45.88 a barrel as traders noted that a tropical storm was behind this week's unexpected slump in U.S. crude inventories.

The energy sector tumbled 3 per cent, including a 10.4 per cent drop in the shares of Crescent Point Energy Corp to $18.15. The company announced a plan to raise $650 million by issuing more shares and a $600 million hike in its capital spending plans.

Pipeline company Enbridge Inc pulled back 1.7 per cent to $58.11 following days of sharp gains after announcing a major takeover.

The materials group, which includes precious and base metals miners and fertilizer companies, dropped 3.6 per cent.

Barrick Gold  lost 4 per cent to $22.88, while Goldcorp Inc G.TO declined 2.9 per cent to $20.76. Goldcorp has hired Bank of Nova Scotia to help it sell a gold and silver mine in Mexico, sources said.

Spot gold fell 0.8 per cent.

Industrials declined 2.6 per cent, including losses for railroad stocks, while financials dipped 0.4 per cent.

Gains for life insurance companies helped restrain losses for financials, including a 1.3 per cent gain for Manulife Financial Corp to $18.16.

The CEO of the country's biggest life insurer said on Thursday that Manulife would consider share buybacks and expected a pause in acquisitions.