Wall Street stocks have slid sharply in the wake of a warning from Apple that its revenues would fall short because of a slowdown in China.

The Dow Jones Industrial Average plunged by more than 650 points, or nearly 3%, at one stage as the warning fed into ongoing worries about the impact of Donald Trump's trade war with Beijing.

A key White House adviser said in response that the ongoing tensions were going to mean that a "heck of a lot" of US firms with sales in China – not just Apple – would see their earnings downgraded until the two countries reach a deal.

Apple's shares were down by as much as 10%, confirming declines seen in pre-market trading and taking its value – which last year saw it become the first listed company to be worth more than $1tn – below $700bn.

The grim mood on Wall Street was exacerbated by worse-than-expected US manufacturing data.

Image: Apple's market value has fallen sharply after it topped $1tn last summer

Technology stocks led the declines with chipmakers and other phone part suppliers both in the US and around the world in the red.

The sell-off also affected luxury brands including UK-based Burberry – down 6% – as Apple said China's economic woes and trade war with the US was weighing on consumers in the world's second biggest economy.

Kevin Hassett, chairman of the White House council of economic advisers, said that US companies selling in China would see their sales recover if the trade dispute is resolved.

He told CNN that China was "feeling the blow" of US tariffs.

"That is having an impact on earnings and it's not going to be just Apple," he said.

"I think there are a heck of a lot of US companies that have a lot of sales in China that are basically going to be watching their earnings be downgraded next year until we get a deal with China."

:: Apple alert raises fresh questions for tech giant

Apple chief executive Tim Cook said in a letter to shareholders, published after the close of trading on Wednesday, that it "did not foresee the magnitude of the economic deceleration" in China.

It now expects revenues of $84bn for the three months to 29 December, down from previous guidance of $89bn-$93bn.

The warning rattled already-volatile US markets, further feeding worries about global economic growth that have dragged on stocks in recent weeks and turned 2018 into the worst year since the financial crisis for Wall Street.

Robert Pavlik, chief investment strategist at SlateStone Wealth in New York said Apple's update "reiterates worries that China and trade issues have not been resolved".

"People are worried that if a big name such as Apple has to report a decline in earnings, who else can be protected from something like that?," he said.

Market jitters even extended briefly to the Brexit-battered pound, which tumbled to a 21-month low close to $1.24 overnight against the US dollar in a "flash crash" triggered by an exodus from currencies considered riskier – before very quickly recovering the losses to return to around $1.26.

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The reaction was less stark in other markets, with the FTSE 100 down by about 0.6% at the close though Germany's Dax and France's Cac 40 were more than 1% lower.

UK-based chipmaker Dialog Semiconductor, which is listed in Frankfurt, fell 9%.

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