Tokyo - News about the latest emergency package to save Germany's real estate financier Hypo Real Estate Holding AG could not clear the gloomy atmosphere in far-away Asia. It was the same with the bail-out package for US financial institutions approved last week.

It was no longer the banking crisis alone that caused deep concern in Japan and other Asian countries. The biggest fear now was that the financial disaster would develop into a global crisis with catastrophic results for all sectors of the economy.

That nightmare scenario caused stocks at Asia's leading exchange in Tokyo to plunge to their lowest levels in nearly five years and sent shares on other Asian markets into a steep decline as well.

"The outlook is very dark, and there is nothing that could entice investors to buy stocks at the moment," an analyst with the Bloomberg financial news agency said, calling the situation the worst he had ever seen.

Because financially strapped Americans bought fewer and fewer Toyotas and Sony television sets, Japan's all-important export engine was beginning to sputter, he said.

The latest survey by the Bank of Japan showed that the mood among industrial managers in the world's second-largest economy was miserable.

And Japan's consumers, too, are holding on to their money for fear of an exacerbation of the global crisis and concern about their future.

Foreign companies represented in the country were also experiencing the fallout.

Sales of German and other imported cars during the first half of the fiscal year, which ends March 31, plunged to their lowest level in 15 years.

Once deemed the world's most-lucrative market for luxury goods, such as handbags and shoes, Japan has lost its luster in that sector, too.

Shopping malls and jewelry shops are complaining about fewer customers, and noting that those who still came bought less.

"Many luxury brands have already launched emergency programmes," said the Tokyo-based director of a European luxury wristwatch manufacturer.

Many of the companies had severely trimmed their advertising budgets even though the luxury brand market was traditionally regarded as practically immune to economic volatility.

But unlike other countries, many buyers of luxury goods in Japan are middle-class people who save up money for the purchases for a long time, and it would be exactly those people who would feel a recession most severely.

Faced with dampened domestic consumer enthusiasm, Japanese companies have to rely even more on foreign markets.

But it appears that beyond the United States, for a long time Japan's most important export market, the financial crisis has now also reached Europe.

"A parallel recession in the US and Europe can mean nothing else for Asia than a nightmare scenario," said Martin Schulz, an economist at Tokyo's Fujitsu Research Institute.

Asia had reacted with concern when the proposed bailout package for Hypo Real Estate appeared to encounter even larger problems than those that surfaced with the much bigger package the US government allocated for its entire financial industry.

Asia's fast-growing economies depend on generous financing, but credit is drying up for them now as much as the equally important export markets of Europe and the United States.

Now if Asia, currently Japan's largest export market, should fall to its knees, it would be nothing less than a horror show for Japan.

More than a handful of observers are already certain that such news is just around the corner.