The FTSE 100 has continued its upward trend powering to a 10-month high, as markets across the world were boosted by hopes of a global economic recovery.

The Index closed up 45 points at 4896, having briefly passed the 4900 mark, spurred by earlier gains in Asia.

The FTSE has seen almost continuous growth since mid July and the value of all British shares has soared by£454bn to £1.44 trillion since early March, when some traders were predicting a depression.

However, the gains have been built on slim trading volumes and are likely to be tested when traders come back to the City from their holidays next month.

Stock market historian David Schwartz said the FTSE had seen its biggest July and August rally since it was created in 1984, as political and economic news suggested the tentative arrival of “green shoots”.

Mr Schwartz said: “The rally that we are seeing in July and August is merely an understanding that economic conditions are improving, which is not what we expected to see during the spring.”

He predicts the FTSE will continue to rise for the next year before seeing falls.

Markets across the world have been boosted by positive comments from US Federal Reserve Chairman Ben Bernanke suggesting the US was on the verge of a recovery and a bigger than expected jump in US home sales.

Ben Potter, a research analyst for IG Markets, said Mr Bernanke’s comments, as well as the positive US housing report were “the icing on the cake” for stock markets.

“It spurred a lot of optimism around the globe that the worst of this crisis is behind us,” he said.

“The subprime housing market started this whole fiasco. Now we’re seeing concrete evidence that it is beginning to mend, which is very positive indeed and one of the final pieces of the puzzle.”

Markets in Asia soared as the US news reverberated across the globe.

The best performer was Japan’s Nikkei, which rose 3%, with China’s main Shanghai index up 1%.

Meanwhile oil is also up above $74 a barrel as confidence rises for economic recovery and amid increased demand.