The Tokyo stock market ended sharply lower Monday, with the downtrend in share prices continuing unabated amid growing worries about the ailing economy.

Despite last week's announcement of a set of economic stimulus measures to be taken by the government, the benchmark 225-issue Nikkei average plunged 515.49 points, or 3.4 percent, to end the day at 14,799.40.

The key market gauge ended below the 15,000 level for the first time in 29 months. Growing pessimism over the prospects of economic recovery, along with fears about a growing number of business failures, sent Tokyo stocks into free fall, analysts said.

The market reacted positively to Prime Minister Ryutaro Hashimoto's surprise announcement of a tax-cutting plan last Wednesday, but feelings of euphoria quickly evaporated amid reports later in the week that a credit crunch had forced food trader Toshoku Ltd. out of business.

The failure of the major first-section trader, which came close on the heels of the collapses of major financial institutions including Yamaichi Securities Co. and Hokkaido Takushoku Bank, renewed worries about the beleaguered banking industry. The stock market's prolonged decline has cut deep into the paper profits on banks' shareholdings, a major portion of their capital bases, forcing them to put the brakes on new lending, said Mamoru Shimode, a strategist at Deutsche Morgan Grenfell Capital Markets Ltd.

Difficulties in obtaining bank loans have forced many firms out of business, casting a long shadow over economic prospects in general and the outlook for the labor market in particular, he said. "Now everybody is selling, not only foreign investors," Shimode said.

Many blue-chip banks took a battering amid reports that Moody's Investors Service Ltd. is considering downgrading Sakura Bank's debts. With hopes of a traditional yearend rally fading, market analysts are now resigned to witnessing a replay of the market's deep slide in August 1992.

After having reached an all-time high of 38,915.87 in late 1989, the Nikkei average then repeatedly dropped below the 15,000 level. The gloom deepened over economic prospects over the weekend as Hashimoto's Cabinet approved a genuine austere budget for the coming fiscal year, brokerage analysts said.

Investor confidence has plunged to an all-time low, they said. "It's a matter of time before the Nikkei average falls below the postbubble low of 14,309.41 set on Aug. 18, 1992," said Hideaki Akimoto, chief strategist at Daiwa Institute of Research Ltd. The distrust in political initiatives is being factored into share prices, Akimoto said, pointing to what he termed as the government's sheer lack of effective policy initiatives to shake the economy out of the doldrums.