And when that happens, a further slide below the post-bubble low of 14,309 for the Nikkei stock average that was set on August 18, 1992, could be surprisingly quick, they say.

``Once it hits 14,308, it will plunge 2,000 points,'' said head of quantitative analysis Robert Sasaki at Jardine Fleming Securities Ltd. ``You'll see a rush of US hedge fund managers selling the Nikkei.''

Neither Japan's economy nor its stock market has recovered from the bubble of inflated land and asset prices of the late 1980s that left its banking system hobbled with massive bad loans and stock owners with losses.

Evidence the equity euphoria that has boosted US and European markets is waning has begun to mount in recent weeks.

The Dow Jones Industrial Average, troubled by concern that Asia's prolonged economic crisis will erode earnings of its powerful exporters, is currently 8.5 per cent off the high it set just six weeks ago.

``It's looking increasingly likely that we're going to face a world bear market,'' said a strategist Garry Evans at HSBC Securities Ltd. ``Clearly we're going to have some volatility for the next few weeks.''

That same volatility is weighing on Japan's big export-driven manufacturers -- the only bright spot in a market that trades at less than half of its all-time high set almost nine years ago.

For instance, Sony Corp, a favourite of international investors, has dropped 15.6 per cent from the high it set in July. Toyota Motor Corp has fallen 16.8 per cent from its high this year. And Matsushita Electric Industrial Co is off 15.2 per cent from its high for the year.

``The effects of weak overseas stocks will easily pull the Nikkei 225 to a 14,600 to 14,300 level,'' said a strategist Mamoru Shimode at Deutsche Securities Ltd.

The key Nikkei average closed up 84.57 points, or 0.56 per cent at 15,072.93 on Tuesday.

But overseas anxieties, like the recent devaluations in Russia and Venezuela, are not the only problems Tokyo stocks face. The banking system's staggering bad loan problem -- estimated at 87 trillion yen ($604 billion) by authorities -- has choked off credit, pushing bankruptcies to record levels.

Bank shares, which now comprise 12.91 per cent of the overall market's capitalisation, have come under pressure as traders and investors doubt that either the banks or the government will be able to effectively deal with the problems.

When ailing Long-Term Credit Bank of Japan Ltd announced a restructuring that included the closure of overseas branches, a 20 per cent reduction in its workforce and the dismissal of the senior management that got the bank into its current mess, the banking sector promptly swooned.

And even if LTCB is married to Sumitomo Trust & Banking-- a proposal that has been floating for months -- analysts say it will not address the financial system's key problem: Too many banks with too much bad debt.

``There are concerns that the failure of a weak bank may lead to more burden on stronger banks,'' Deutsche's Shimode said. ``LTCB will survive, but it will leave overcapacity in the banking industry.''

And banks could contribute to the equity debacle themselves if they move to sell off parts of their massive stock holdings to dress up earnings results.

Technical analysts fret that already-fragile sentiment will turn ugly fast if the Nikkei slips below the 14,655-point level.

``If we don't hold these levels, I'm afraid we could be poised to test post-bubble lows,'' said a dealer Michael Wilkins, at Credit Lyonnais.