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The stock market closed at its highest level for 22 months last night after strong American economic data and company results fanned hopes that recovery in the world's biggest economy was gaining pace.

The FTSE 100 rose 34.59 points to 5,796.25, its highest close since June 2008, after bumper quarterly profits at the banking giant JPMorgan Chase and record results from the microchip maker Intel.

On Wall Street, the Dow Jones industrial average burst through the 11,100 level and the S&P 500 index punched above 1,200 for the first time since September 2008 - the month that Lehman Brothers collapsed.

Aside from strong corporate results, sentiment was also lifted by a clutch of positive economic data from the US, including some unexpectedly healthy retail sales figures.

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The mood was further lifted by upbeat reports in the "Beige Book" - the US Federal Reserve's monthly summary of economic activity across America and by comments from Ben Bernanke, the Fed Chairman, which were taken as being more positive than for some time. Giving evidence to the joint economic committee in Congress, Mr Bernanke refused to rule out the possibility of the US slipping back into recession, but indicated that interest rates were likely to remain low and that he expects subdued inflation during coming months.

He said: "It looks like we're on a path to moderate recovery and that the risk of a double-dip [recession], while certainly not negligible, is certainly less than it was a few months ago."

His comments came as it was confirmed that American retail sales during March were some 1.6 per cent higher than in February, the biggest monthly rise since November and stronger than the 1.3 per cent growth Wall Street analysts had expected.

Much of the increase came from strong car sales - partly because of the incentives offered by Toyota after the recall of its cars in January - although other sectors also did well, including clothing, whose sales were lifted by warm spring weather.

Michelle Meyer, US economist with the Barclays Capital investment bank, said that the figures were "decidedly strong". She added: "The pick-up in consumer spending is crucial for creating positive momentum in the economy and making it a sustained recovery."

Ms Meyer also pointed to separate data showing that US businesses continued to rebuild their stocks during February, with business inventories rising by 0.5 per cent - the biggest monthly gain since July 2008.

She said: "Businesses are restocking in response to stronger sales. We expect continued restocking, which implies greater production and stronger overall growth."

Adding to the mood of optimism, a report from the US Labor Department pointed to "core" inflation remaining relatively weak, raising hopes that the Federal Reserve will have plenty of freedom to keep interest rates at record lows during coming months.

Meanwhile, the JPMorgan Chase chief executive also said he was looking forward to a strong recover as he reported a better than expected 55 per cent rise in quarterly profits. Jamie Dimon said: "While the economy still faces challenges, there have been clear and broad-based improvements in underlying trends. We believe these improvements will continue and are hopeful they will gather momentum, resulting in a strong recovery."

Further evidence on the strength of the US recovery will come with results today from Google and tomorrow from General Electric.

David Jones, chief market strategist of IG Index, the spread-betting firm, said that, after a few "boring weeks", strong numbers from America had injected some life back into the market. He added: "We are more comfortable than we were that the economic recovery is on track. There's plenty of scope for the Footsie to now push to 6,000."