STRONG overseas demand for quality blue chips took the Hang Seng index on a 346.08-point rise, up three per cent to 11,363,77 in Hong Kong yesterday. This push for local stocks continued over night in London trading, taking the index up another 102 points to around 11,466 for the opening of local trading today. Morgan Grenfell Asia institutional sales broker Andrew Mathers said: ''The steep rise today took a few investors by surprise. ''We saw some strong buying in very solid fundamentally quality companies from overseas.'' Turnover was a moderate $8.4 billion, similar to Tuesday's activity, taking this week's daily average so far to $7.7 billion, down $1.2 billion on last week's average. Share volume was 1.63 billion, 700 million less than Tuesday's total, adding support to the view that there was a minor feeding frenzy on blue chips in the day. The total number of deals was 64,501, down some 10,000 on the day before. Strong buying of Hongkong Telecom in the United States overnight gave the Hang Seng index a strong morning kick-start yesterday. American depositary receipts (ADR) trading of Hongkong Telecom pushed the stock up the equivalent of 30 cents to $15.50 by the time local investors were able to get their hands on the stock again in the local time zone. The US buying came on the back of a strong buy recommendation from Salomon Brothers, which claimed fears about Hongkong Telecom's business prospects in the future were unfounded and $22 a share was a fair value, up some 45 per cent. Once local and overseas investors in Europe got into the buying action, the stock catapulted to $16.20, up $1 on the previous Hong Kong close or 70 cents on ADR buying. The total rise, one of the biggest single-day leaps in recent times, added 63.43 points to the index alone. Turnover was $437.83 million, the second highest of the day, on share volume of 27.27 million. The index leapt 181 points in the first half-hour of trading. It paused for breath before moving through 11,200 by 11.15 am. By 11.45 am it had hit 11,278.05 but slid back to 11,263.69 before lunch. In the afternoon no one appeared to be prepared to wait to see if there would be any selling early in the session as the index broke through 11,300 in the first 15 minutes. The high of the day was touched at 11,400.39 by 3 pm before a combat between buyers and sellers left the index settling at the 11,363.77 close. With strong earnings growth for 1993 and 1994 expected in analysts' forecasts, and the continuation of low interest rates in the short term, overseas institutions remain supportive of quality domestic stocks. HSBC led trading for the third consecutive day with turnover of $651.42 million and a share volume of 5.68 million. The stock rose $2 to $114 on continued positive sentiment towards the group's prospects, in the wake of an upgrading of the banking sectors' analysts forecasts of the 1993 results. This followed strong results from Bank of East Asia, which took the unprecedented step of clarifying its 46 per cent rise in net profit to just over $1 billion was fundamental and had not involved a transfer out of inner reserves. The stock fell 50 cents to $54.50 on a turnover of $392.07 million and a share volume of 7.18 million. Swire Pacific had a bumper day, rising $4 in heavy buying amid speculation of a covered warrant issue on the stock from Jardine Fleming, which later proved correct. The share closed at $63.50 on turnover worth $306.41 million and a share volume of 4.95 million. Jardine Matheson was the strongest performing blue chip, up $6 to $76.50 on a turnover of $196.78 million and a share volume of 2.64 million. By Hang Seng sub-sector, commerce and industry was the best performer, up 4.67 per cent to 8,367.88. Utilities came in second with a rise of 3.88 per cent 12,227.44. This was followed by property developers, up 2.5 per cent to 21,002.86 and finance rising 1.47 per cent to 10,038.74. This compares with the index rise of 3.14 per cent. Hutchison Whampoa had a second good day with a rise of $1.75 to $37.50 on a turnover worth $295.62 million and a share volume of eight million. Since Tuesday morning the stock has gained $3. On the last four days trading it is up $6.75. On the last eight days trading it is up 6.4 per cent, compared with the index rise of 3.3 per cent, making it the seventh best performer over that time period. Wharf Holdings made it into the top 10 stocks by activity, coming in sixth with a turnover of $286.2 million and a share volume of 2.4 million. The share rose $1.75 to $34.75 as it continued to benefit as a company with a strong office rental earnings component in the wake of the Jones Lang Wootton annual report for 1993. This indicated massive leaps in office and luxury property values and rental growth. Sun Hung Kai Properties, with its strong luxury residence exposure, saw its stock rise $2 to $68 on a turnover of $265.05 million and share volume of 3.9 million.