The FTSE 100 index returned, at last, yesterday to levels last seen before the collapse of Lehman Brothers in September last year. It surged past 5,300 points to a 14-month high, driven upwards by renewed investor confidence in the prospects for recovery.

The index rose 86.29 points to 5,382.67— and there could be more to come amid hopes of a continued run. The market struggled to breach the 5,300 watershed last week as investors fretted that it was running ahead of the economic recovery, but yesterday was different.

Joshua Raymond, market strategist at City Index, said: “The key for the FTSE 100 is now momentum. November historically has been a bullish month for the UK index and, if sentiment continues to improve, there seems little reason to suggest why the FTSE cannot now target 5,500 for the year-end, which would mark a terrific turnaround from a year ago.”

Mining stocks provided the biggest stimulus for yesterday’s gains as the upward march in the gold price fed through to companies in the sector.

Rio Tinto was one of the biggest risers, adding 171½p to reach £33.04½ ahead of the initial public offering of Cloud Peak Energy, the miner’s American thermal coal assets, on the New York Stock Exchange. Rio Tinto aims to raise $800 million (£477 million) through the sale of 30.6 million shares on Thursday as it looks to raise funds to reach its $10 billion asset sale target to reduce debt.

Anglo American also found support, rising 104p to £26.53, after recruiting Jack Thompson, the former vice-chairman of Barrick Gold, as a new non-executive director. Other miners benefiting from higher prices included Xstrata, which rose 79p to £10.93, Antofagasta, which gained 66p to 934p, and Randgold Resources, which rose 227p to £49.34.

BT closed 3p up at 149½p and could ring up further gains after Morgan Stanley raised its earnings forecasts following interim results last week.

Water utilities were one of the few sectors to sink on the day amid concerns that Ofwat, the regulator, had not eased its stance on price controls for the next five years. The regulator is expected to make a final decision on November 26, after announcing its initial proposals in July, and investors fear that the water companies may need to strengthen their balance sheets via disposals or rights issues. United Utilities fell 1½p to 471½p while Pennon slipped 5¾p to 463p and Severn Trent leaked 2p to close at 995p.

Domino’s Pizza added some spice to the mid-cap sector after revealing a plan to return £19 million in surplus cash to shareholders via a share buyback. This is after four of its management team took away £18 million in profits in the wake of selling nearly six million shares at 310p. News of the share buyback was welcomed, with the shares rising 5¾p to 322¾p.

Trinity Mirror, which closed 11¾p up at 186½p, was the top riser among the mid-caps after UBS said that it was its top pick in the sector.

• New York: Investors kept the stock market’s upward momentum going, sending share prices sharply higher after retail sales rebounded more than expected in October and the dollar extended its slide. Leading indices rose to 13-month highs, including the Dow Jones industrial average, which closed 136.49 points up at 10,406.96.

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