BRASILIA, Brazil - Don't panic.
That was Stephen Harper's message Monday as the Toronto stock market plunged to its lowest level in almost a year on the first day of trading after the United States had its credit rating bumped down a tier.
"To date, this doesn't change our overall assessment," the prime minister said during a visit to the Brazilian capital.
"Notwithstanding the fragility of the economy and the headwinds that are there, we believe that a gradual recovery can continue. Our policies have been achieving that in Canada.... But obviously we have to do more."
The S&P/TSX composite index fell nearly 500 points Monday — its biggest one-day drop since Dec. 1, 2008, when markets were still reeling from the near collapse of the financial sector. Wall Street was also hit hard, with the Dow industrials down more than 600 points.
The turmoil came after Standard & Poor's stripped the United States of its top-notch AAA credit rating for the first time. The credit rating agency bumped the U.S. down one rung to AA+.
At a signing ceremony with Harper for several modest bilateral deals, Brazilian President Dilma Rousseff criticized the credit-rating agency for an "incorrect assessment."
"We do not agree with the rushed evaluation, a little bit too quick evaluation, and I would even say incorrect assessment made by Standard & Poor's which reduced the credit rating of the United States."
The Prime Minister's Office later clarified that Rousseff was speaking on behalf of Brazil, not Canada.
Harper opened a four-country tour of Latin America by announcing agreements with Brazil on air transport, social security, Olympic co-operation and international development aid effectiveness.
Harper and Rousseff also announced a business leader's forum that would see Canadian and Brazilian executives meet on the margins of high-level diplomatic talks.
"Brazil is a major global economic player and a key priority market for Canada," Harper said in a press release.
"These agreements will benefit both countries by promoting greater two-way flow of people, goods and services, enhancing our competitiveness and further strengthening our partnership in key areas of shared interest."
Canada is seeking bilateral free trade deals with a number of countries, placing a special emphasis on the countries of Latin America and the Caribbean.
The Conservative government is eager to make inroads with Brazil in particular, the world's seventh-largest economy and expected to rise to No. 5 within a few years.
But doing a deal with Brazil is tricky. Brazil needs the consent of Argentina, Paraguay and Uruguay — members of a common South American economic bloc called Mercosur — to enter into such an agreement.
Harper said Canada has begun exploratory talks with Mercosur on a free-trade deal.
Harper's trip takes him to Brazil, Colombia, Costa Rica and Honduras.