Apple shares slid 4.3 percent after the company's fourth-quarter revenue forecast fell short of estimates and it missed some targets for iPhone sales.

The poorly received earnings report hit companies with close ties to Apple. In Europe, chip designer ARM Holdings, a major supplier, tumbled 6.6 percent and German chipmaker Dialog Semiconductor fell 5.2 percent.

Because of Apple's size, its decline was disproportionately felt on the market, said Phil Orlando, chief equity market strategist at Federated Investors in New York.

"You are seeing a hit as a knee-jerk reaction on the downside," Orlando said. "The company is still growing like a weed. It's well managed and well capitalized."European tech stocks shed nearly $6 billion of market value, with the STOXX Europe 600 tech index <.SX8P> off 1.7 percent.

Art Hogan, chief market strategist at Wunderlich Securities in New York, said there is concern regarding the lack of organic revenue growth and the strong dollar, which will continue to be a drag, but that effect should moderate over time.

U.S. companies are expected to post their worst sales decline in nearly six years in the second quarter, in part due to the strong dollar, which cuts the value of overseas income.

The FTSEurofirst 300 index <.FTEU> of leading European shares closed down 0.62 percent at 1,586.46, while MSCI's all-country world stock index <.MIWD00000PUS> was down 0.65 percent.

On Wall Street, the Dow Jones industrial average <.DJI> closed down 68.25 points, or 0.38 percent, to 17,851.04. The S&P 500 <.SPX> fell 5.06 points, or 0.24 percent, to 2,114.15 and the Nasdaq Composite <.IXIC> lost 36.35 points, or 0.7 percent, to 5,171.77.

The dollar index <.DXY>, a gauge of the greenback against a basket of currencies, extended gains after data showed U.S. home resales hit an 8-1/2-year high in June, and was last up 0.17 percent at 97.493.

The euro fell 0.14 percent to $1.0921 , while the dollar rose 0.08 percent at 123.97 yen .

Sterling gained in response to minutes from the Bank of England's last meeting that suggested some policymakers support higher interest rates.

The British pound rose 0.22 percent at $1.5594.

Oil prices fell as U.S. crude stockpiles rose last week, remaining high above the five-year seasonal average, while gasoline stocks decreased and distillate inventories rose, data from the Energy Information Administration showed.

Brent crude fell 91 cents to settle at $56.13 a barrel. U.S. crude dipped below $50 a barrel, trading down $1.67 a barrel to settle at $49.19.

Gold fell more than 1 percent to a five-year low as the bounce in the dollar fuelled downside momentum.

U.S. gold futures for August delivery settled down $12 an ounce at $1,091.50.

Copper prices hit a two-week low as worries about demand from top consumer China mounted. Benchmark copper on the London Metal Exchange closed down 1.7 percent at $5,360 a tonne.

Benchmark and long-dated Treasury yields hit their lowest levels in nearly two weeks as poor sentiment from U.S. corporate earnings reports drove safe-haven buying. Uncertainty ahead of next week's Federal Reserve meeting capped gains.

Benchmark 10-year Treasury notes were last up 3/32 in price to yield 2.3289 percent.

"The weakness in the stock market over the last two days has helped push Treasuries prices higher," said Shyam Rajan, U.S. rates strategist at Bank of America Merrill Lynch in New York.

(Reporting by Herbert Lash; Editing by Meredith Mazzilli)

By Herbert Lash

Stocks treated in this article : Apple Inc., Dialog Semiconductor PLC, ARM Holdings plc