Wall Street stocks extended gains following remarks from Federal Reserve Chairman Ben Bernanke and stronger-than-expected retail sales figures and rising commodity prices.

Mr Bernanke said the Fed was monitoring the declining value of the dollar closely, saying the Fed was committed to both jobs growth and price stability.

But he said other factors were restraining inflation in the United States and repeated the Fed was likely to keep interest rates exceptionally low for an extended period.

The Dow Jones industrial average closed up 136.49 points, or 1.33 per cent, at 10,406.96 in New York.

US retail sales rose 1.4 per cent in October, helped by car sales continuing to grow despite the end of America’s scrappage scheme. Today’s increase compares to a 0.8 per cent rise expected by economists and is sharply up from the 2.3 per cent fall in September.

Ian Shepherdson, chief US economist at High Frequency Economics, said that core sales, excluding cars, petrol and food, rose 0.3 per cent for the third straight month.

”With core sales up a bit and auto sales growth falling by less than we feared in the months after the end of the clunker programme, consumption seems set to rise by more than 2 per cent in Q4 as whole,” he said. Though he questioned how sustainable this would be.

Shares in the financial sector traded higher following news that highly respected hedge-fund manager Paulson & Co bought 300 million Citi shares during the third quarter. Paulson & Co also cut its holdings in Bank of America and its interest in Goldman Sachs indicating that the group is betting on a recovery by the worst-hit banks.

Investors scrutinise Paulson & Co’s holdings since the firm reaped big gains by betting that the US mortgage market would collapse in 2007. It also bet that financial services companies would tumble last year.

In London, the FTSE 100 closed up for the fourth straight session - ahead 86.3 points at 5382.7, with miners extending this morning’s gains.

Gold raced to a record high above $1,140 an ounce, gaining 2 per cent as a weakened dollar boosted funds’ risk appetite for investments across the board.

Lonmin, the platinum miner, closed up 148p or 9.3 per cent at £17.40 after it upped its forecast for platinum production and said it envisaged prices rising gradually next year.

Xstrata rose 79p at £10.93 and Antofagasta, the Chilean copper producer, increased 66p at 934p. Randgold Resources, the gold specialist, gained 227p to £49.34.

Oil continued its rebound, with London Brent crude for January, gaining 77 cents to $77.24 a barrel, helping some of the smaller oil groups advance, with Cairn Energy up 52p at £29.22 and Petrofac, the oil services specialist, up 18p at £10.25.

Defensive stocks such as utilities and major retailers were under some selling pressure, with United Utilities off 1.5p at 471.5p and Severn Trent down 2p at 995p. Marks & Spencer eased 0.3p to 372p amid some fears about the strength of Christmas trading.

RSA Insurance lost 1.2p at 120.7p, as it traded ex-dividend.

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