US equity markets suffered a brief but violent sell-off after a news agency’s hacked Twitter account posted a fake tweet about a terrorist attack on the White House.

The bogus posting from Associated Press's main account told its millions of followers President Barack Obama had been injured in an explosion. The incident is a sign of the growing influence of Twitter on investors and the risks associated with inaccurate information on social media channels.

It comes just weeks after the US stock market regulator gave companies permission to use social media to communicate with investors and news agency Bloomberg’s move to pull tweets into its terminals for traders.

AP’s Twitter account, which has 1.9 million followers and carries the site’s “verified” stamp of authenticity, posted at 1.07pm Eastern Time: “Breaking: Two Explosions in the White House and Barack Obama is injured.”

Within minutes, @AP’s profile was suspended and other accounts associated with the news agency said the inaccurate report was the result of a hacking attack.

The White House's press secretary confirmed there had been no attack in Washington. However, the alarm was enough to knock more than 130 points off the Dow Jones Industrial Average. The index fell just under 1 per cent before recovering moments later.

Sudden cancellations
"After the tweet went out, we noticed there was a liquidity gap in the market, where all the buy orders that were out there all of a sudden seemed to be getting cancelled," said Reginald Browne, managing director of Knight Capital's exchange traded funds unit.

“A minute and a half later, when the tweet seemed to be bogus, the market recovered.”

Social media sites such as Twitter and Reddit faced criticism last week after they played host to rumours about the hunt for the Boston marathon bombing suspects. – (Copyright The Financial Times Limited 2013 )