AN outstanding performance on Wall Street on Thursday stimulated the local stock market yesterday, with stocks holding onto further gains for the third successive day. The Hang Seng index rose 3.04 per cent to close 242.54 points higher at 8,218.95 points on modest turnover of $4.58 billion on heavy trading. Buoyed by the performance of the Dow Jones industrial average, which surged to more than 4,000 points to a historic high, the Hang Seng index was boosted 192 points to 8,169.27 points in the first 15 minutes of the morning session yesterday. Standard Chartered Securities research director Eugene Law said: 'The market is largely led by Wall Street and market sentiment has improved.' Fuelled by optimism about the direction that the economy and interest rates were taking, the Dow Jones industrial average surged through the 4,000 barrier for the first time in Wall Street's history on Thursday. The Dow, which rose 9.08 points on Wednesday, surged 26.95 points to top the psychologically important 4,000 points on Thursday, reaching 4,015. Baring Securities director James Osborn said the local equity market still relied on Wall Street and interest rates. 'If Wall Street goes up, Hong Kong will go up. 'It is too early to say [whether] interest rates have peaked. 'But the likelihood that interest rates [will] go up seems to be getting less.' Hong Kong stocks remained narrowly bound in mid-afternoon trade with the Hang Seng index showing strong resistance at the 8,200 level. It edged up 191.24 points, or 2.4 per cent, to 8,167.65 points in the morning close. Mr Law said trading became more active ahead of the afternoon close. The Hang Seng index reached 8,236.31 points before finishing the day at 8,218.95. Brokers said investors remained hesitant about pushing the market beyond its opening Wall Street-inspired surge, and that stocks were mostly moving in line with futures market moves. Overseas institutions, mainly from the United States and Britain, did most of the buying. OCBC Securities senior institutional sales manager Priscilla Ng said: 'The institutional investors are not very active because the market is still too volatile at the moment.' Investors are still waiting for the outcome of Sino-US trade talks this Sunday. Mr Osborn said the stock market would be boosted if the two countries reached agreement. He said Wall Street was still the big factor dictating the behaviour of the local market. A number of events next week are expected to dictate market behaviour. They include the announcement of year-end results of the Hongkong and Shanghai Bank and Hang Seng Bank and the Budget for 1995-1996. Property counters continued to stay firm after Wednesday's land auction. They were further strengthened after Hang Seng Bank announced its decision to raise its loan-to-valuation ratio for properties worth $5 million or more from 50 per cent to 70 per cent. Cheung Kong shares went up 5.71 per cent to $33.30 on turnover of $357.43 million, while Sun Hung Kai Properties gained 3.3 per cent to $50 on turnover of $340.19 million. Henderson Land was among the best performers, rising 7.27 per cent to $41.30. Share prices of Hopewell also rebounded on the day, gaining 0.62 per cent to $5.85 on turnover of $108.86 million.