US retailers reported stronger than expected sales in June as the belated arrival of hot weather and improving confidence in the economy encouraged spending on clothing, air conditioners and outdoor equipment, offsetting concerns over fuel prices.

An index of sales at 70 retail chains compiled by the International Council of Shopping Centres rose 5.3 per cent, for the month, the highest increase since May 2004, said Michael Niemirah, ICSC's chief economist. "We got an added bonus in that weather turned much more favourable on a year-to-year basis, which gave an additional lift to seasonal goods," said Mr Niemirah, who pointed to reports of strengthening consumer confidence and expectations of stronger employment figures. "It was a broad-based improvement."

Wal-Mart, the largest US retailer, said sales at stores open at least a year increased 4.5 per cent, the strongest growth for 13 months and in line with a revised forecast issued on Saturday. The retailer, which originally predicted June sales in the 2-4 per cent range, forecast sales growth of 3-5 per cent in July.

While Thomas Schoewe, chief financial officer, said the sales momentum was "encouraging", he noted that Wal-Mart was continuing to "experience expense pressure". The company left its earnings forecast for the quarter unchanged.

Wal-Mart's improved performance was again overshadowed by Target, its main discount rival. Target, which attracts more well-off shoppers than Wal-Mart, reported a 9 per cent increase in same-store sales, easily beating its 4-6 per cent forecast. Target increased earnings guidance for the quarter, saying it expected at least 58 cents a share, against previous estimates of 53 cents.