Overseas events continued to play the major role in determining the direction of London's equity market, with the latest surges on Wall Street and Hong Kong fuelling a buoyant performance by all FTSE indices.Wall Street followed up Wednesday's strong performance, which saw the Dow Jones Industrial Average race up 95 points, with another powerful showing yesterday, posting an 80 points-plus gain not long after trading commenced.London's strong showing was all the more impressive given a spate of worrying domestic economic news, including a marked deterioration in Britain's trade balance and a worryingly downbeat June survey of manufacturing trends from the Confederation of British Industry.The latter showed total manufacturing orders at their lowest levels since 1993, news viewed with alarm by analysts covering the big engineering and other British exporting sectors.Although international influences drove London stocks sharply higher, market observers were keen to point out that the flow of profit downgrades among FTSE 250 constituents was as strong as ever.Dresdner Kleinwort Benson was said to have downgraded no less than four of the leading lights in the FTSE 250 index yesterday: BPB, Spirax Sarco, David S. Smith and Charter. And dealers noted that there were no fewer than four profits warnings among 250 constituents earlier in the week: Laird Group, London Forfaiting, First Leisure and Sears.At the finish of a busy session, the FTSE 100 index had notched up a 54.0 gain at 5,858.9, extending its rally over the past three sessions to 147.5 or 2.6 per cent.The FTSE 250 finally ended its 11-session sequence of losing performances, rallying 21.3 to 5,527.7, helped by a good rally by many of the housebuilders and building materials stocks. Those sectors have had a hard time since the surprise increase in British interest rates some weeks ago.And the FTSE SmallCap index fared well, pushing up 6.0 to 2,617.0.In spite of the widespread gains, dealers and analysts remained wary of chasing stocks in the current global environment, which has seen intense worries about developments in Asia, specifically Japan. And the domestic economic scene has become increasingly uncertain over the past month after the interest rate rise, and news of higher-than-expected average earnings, inflation and retail sales.Market-makers, still aware of the potential for more Asian-inspired problems likely to affect British stocks, remain unhappy about running longpositions in London stocks.And some strategists continue to warn their clients about the damage being caused to profits by sterling and the Asian crisis. "This could well be the calm before the storm; the London market is facing marked downgrades of profits estimates," warned Richard Jeffrey, group economist at Charterhouse Tilney.Turnover in equities picked up substantially to reach 1.09 billion shares at the 6 p.m. cut-off point.In the banking sector Barclays gained 16p to £17.33, Lloyds TSB 33p to 853p, Abbey National 20p to £10.58, Alliance & Leicester 10p to 804p, Halifax 81/2p to 8041/2p, NatWest 9p to £10.92 and Woolwich 63/4p to 3283/4p.Dealers focused on the supermarkets sector after a surge in sales at Asda's George clothing range and massive price cuts on designer labels helped the group fight off fierce competition from its rivals.Although total profits were just down at £404.9 million, against £405.2 million in the previous year, on turnover up from £6.9 billion to £7.6 billion, underlying profits were 14 per cent higher.And plans for Internet and home delivery shopping helped the groupgain 101/2p to 205pICI fell after analysts' briefings gave the impression of further problems ahead from sterling, Asian flu and US price wars. The group ended down 5p to 995p.