North American stock markets rode a rollercoaster on Thursday afternoon, as concern grew that the Greek debt crisis could spread to other European countries.

But as market panic gave way to calm later in the evening, one of the biggest U.S. banks began probing rumours that a trader may have accidentally triggered the plunge.

During a 15-minute period, the Toronto Stock Exchange tumbled more than 450 points, as investors grew skittish about the European Union's ability to bail out Greece.

However, by the end of trading, the TSX had regained most of its ground as markets adjusted to the uncertainty.

Some sources said the drop occurred because a trader may have typed the letter "b" for billion instead of "m" for million.

Some reports claimed that the transaction involved Proctor and Gamble, a normally stable stock, which dropped 30 per cent at one point.

By the evening, Citigroup said it was probing the rumours.

Meanwhile, the TSX closed down 32.70 points, to finish the day at 11,842.43.

In New York, the Dow Jones industrial average plunged 1,000 points, but partially rebounded as trading ground on through the afternoon.

By the end of the day, the Dow was down 342.88 points and finished at 10,525.24.

The Canadian dollar also lost about two cents, closing at 95.03 cents U.S.

BNN's Mark Bunting said that at one point, the Dow was down 8.8 per cent -- one of the largest drops since the market crash of 1987.

Commodities and the Euro currency were hit hard, as investors sought refuge in the relative stability of the U.S. dollar, the Japanese Yen and gold markets.

The plunge came amid concern that the Greek debt problems could spread to Spain and Portugal, who may also require huge monetary aid to avoid defaulting on their sovereign debt.

On Thursday, Greek lawmakers passed new austerity measures which aim to trim back national debt and put the country's finances in order.

Avery Shenfeld, chief economist at CIBC World Markets, said the fluctuations also reflect jitters about potential cutbacks in the coming year.

"What this presages, I think, is a bit of concern over what 2011 is going to look like," he said.

Shenfeld explained that 2010 saw some smaller economies, like Greece and Portugal, forced into big budget cutbacks.

Now the market is reflecting concern that bigger economies like the U.S. will need to scale back as government stimulus money runs out.

"We saw that any asset that was connected to the strength of the global economy --whether it was stocks or oil prices -- slip during the day," he said.

Shenfeld noted that governments shouldn't be too quick to raise interest rates over the next year, as the recovery appears to be fragile.

Still, the market dip was exacerbated by computer trading programs, which automatically begin selling stocks when key indexes drop to a certain level. Though the programs are designed to stave off investor loses, they actually led to a downward cycle Thursday, analysts said.

"I think the machines just took over. There's not a lot of human interaction," said Charlie Smith, chief investment officer at Fort Pitt Capital Group. "We've known that automated trading can run away from you, and I think that's what we saw happen today."

While Canada's economy has been gaining ground since emerging from the 2008 financial crisis, the progress could be sideswiped by a widespread European debt crisis, warned Ian Lee, a business professor at Carleton University.

"If Europe goes into a double dip … It's going to blow back on Canada," he told CTV News Channel.

Lee said that European trade with both Canada and the U.S. could be affected, which would also slow down the U.S. economy and further impact Canada.

"We'll get hit twice," he said.

With files from The Associated Press