Leading US retailers have unveiled sharply higher profits, boosting hopes that the economy is firmly on track for recovery.

Home Depot, the world's largest home furnishings chain, said on Tuesday that profits for the three months to early May climbed 35%, while discount retailer Target unveiled a 36% jump in earnings.

The retail sector's performance is seen as a key indicator of the health of the wider economy in the US, where consumer spending accounts for two-thirds of all economic activity.

Same-store sales at Home Depot were up by 7%, and by 5% at Target, raising hopes that the US consumer boom still has some way to run.

Rain deters shoppers

US consumers' willingness to keep spending last year in the face of a severe economic downturn and the 11 September attacks is credited with staving off a prolonged recession.

But flattening retail sales figures and declining consumer confidence have in recent weeks raised fears that shoppers have started to trim their spending in the face of continuing economic uncertainty.

A closely-watched fortnightly snapshot of the US retail sector on Tuesday showed a 0.3% decline in sales during the two weeks to 18 May compared with the previous two-week period.

Instinet Research, the author of the survey, said cold weather and heavy rains had curbed activity at the tills.

Market jitters

Also on Tuesday, office supplies chain Staples Inc said net income for the three months to early May more than doubled to $94m.

And upmarket department store Saks unveiled a 25% jump in profits before one-off costs over the same period.

But the news was not enough to halt a slide in share prices on Tuesday, with the Dow Jones index closing 1.21% lower at 10,105.71.

Home Depot shares led the decline, finishing 7% lower at $44.90 because of concerns that the company's sales are growing less quickly than its competitors'.