The Republican White House hopeful kicked off the day with a blistering assault on the Democratic former secretary of state, calling her a "world-class liar" and castigating her "disgraceful" record on trade, foreign policy and immigration.
Clinton, who is determined to make history as America's first female commander-in-chief, ridiculed Trump hours later as the "self-proclaimed king of debt" with a "hollow sales pitch" who threatened to bankrupt the US economy.
The rivals are the most loathed presidential hopefuls in modern US history -- Clinton's unpopularity after decades in public life bested only by even greater distaste for the New York billionaire.
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US elections often hinge on a handful of swing states, leaving the candidates battling to win over the middle ground and court some of the passionate support captivated by self-declared Democratic socialist Bernie Sanders.
"Hillary Clinton may be the most corrupt person ever to seek the presidency," declared Trump in a speech signalling a new tone in his campaign, making a pitch to all Americans and toning done his offensive remarks against Muslims.
The 70-year-old Trump painted himself as an innovative thinker who would protect working Americans from a system rigged against them by career politicians, such as Clinton.
Clinton said she alone had the policies to get things done, denouncing special interest groups and Wall Street influence, vowing to fight inequality and build a new 21st economy to create new jobs.
But Clinton was part of the problem, Trump claimed, accusing her of running "the State Department like her own personal hedge fund -- doing favors for repressive regimes, and many others, in exchange for cash."
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"In just four years, secretary Clinton managed to almost single-handedly destabilise the entire Middle East," he added.
Trump even sensationally alleged that the US ambassador to Libya, Chris Stevens, who died in an attack on the consulate in Benghazi in 2012, was one of the victims of her decisions.
"He was left helpless to die as Hillary Clinton soundly slept in her bed," he said. "Her decisions spread death, destruction and terrorism everywhere."
At a rally in Raleigh, North Carolina, a largely Republican state, the 68-year-old Clinton was not to be outdone.
"Donald hates it when anyone points out how hollow his sales pitch really is, I guess my speech yesterday must have got under his skin," she hit back.
"He's going after me personally because he has no answers on the substance," she said. "All he can do is try to distract us."
Reports filed this week with the Federal Election Commission show that Clinton has a whopping $42 million in donations and Trump just $1.3 million, exacerbating weeks of speculation that his campaign is unravelling.
Trump assailed Clinton's support for trade deals, saying they had cost the country nearly a third of its manufacturing jobs and that the trade deficit with China soared by 40 percent while she was secretary of state.
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Clinton countered that Trump had "no credible plan for rebuilding infrastructure" and "no real strategy for creating jobs... just a string of empty promises."
"Maybe we shouldn't expect more from someone 'whose most famous words are 'you're fired'," she said in a jibe about his former career as a reality TV star. "As president, I'm going to make sure that you hear 'you're hired'."
"We can't let Donald Trump bankrupt America the way he bankrupted his casinos," she added.
Besides assailing Clinton, Trump used his speech to row back from months of offensive remarks against Muslims, whom he has said should be banned from entering the United States in the wake of terror attacks at home and overseas.
He said the Islamic State group in Syria had victimised "peaceful Muslims across the world... who only want to raise their kids in peace and safety."
Clinton defended her family's Clinton Foundation against attacks from Trump, saying it had saved the lives of people around the world.
"Donald Trump uses poor people around the world to produce his line of suits and ties," she countered.
While Clinton had an eight-point lead over Trump in Florida, a poll published Tuesday by Quinnipiac University put the two rivals each on 40 percent in Ohio and Clinton on 42 percent and Trump on 41 percent in Pennsylvania.
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