NEW YORK, March 17 (UPI) -- U.S. stock indexes dropped sharply midmorning Monday despite a U.S. Federal Reserve move to restore investors' confidence with a rare Sunday policy shift.

The Fed cut prime credit rates by 0.25 of a percent, to 3 1/4 percent Sunday and opened the invitation to securities firms to borrow from the central bank under the same terms as regulated banks.

The Dow Jones industrial average fell in midmorning trading anyway, dropping 131.56 points to 11,819.52, down 1.1 percent. The Standard & Poor's 500 index declined 1.59 percent to 1,267.61 points, off 20.53 points. The Nasdaq composite index lost 35.12 points to 2,177.37 points, a decline of 1.59 percent.

The 10-year U.S. Treasury note gained 23/32 to yield 3.386 percent.

The euro traded at $1.5727 Monday from $1.5671 Sunday, while the dollar traded at 97.22 yen from 99.32 yen Sunday.

In Tokyo, the Nikkei average lost 454.09 points Monday to fall to 11,787.51 points, down 3.71 percent.

Fed moves on Sunday to help banks

WASHINGTON, March 17 (UPI) -- The U.S. Federal Reserve cut the primary credit rate from 3 1/2 percent to 3 1/4 percent on Sunday to provide some breathing room for troubled banks.

The action lowers the spread of the primary credit rate over the Fed's target fund rate by 1/4 percent and allows banks to borrow from each other at more favorable rates over loans until the loan rates begin to react.

It was an unusual, weekend response to trouble in the financial district.

The Fed also announced Sunday it would provide $30 billion in financing for Bear Stearns (NYSE:BSC-E) assets as J.P. Morgan and Co., purchased the investment bank, which was facing bankruptcy, for $2 a share.

And, in a second policy shift Sunday, the Fed moved to provide assistance to foundering financial concerns by extending an invitation to securities firms to borrow from the central bank on the same terms as regulated banks.

The new terms will be available for six months, a Fed statement issued Sunday said.

NASA awards Kennedy support contract

WASHINGTON, March 17 (UPI) -- The U.S. space agency has awarded Rede-Critique Inc. of Metairie, La., a $45 million contract for Kennedy Space Center support services.

The indefinite-delivery, indefinite-quantity four-year, six-month contract includes a six-month base period and four one-year option periods. The National Aeronautics and Space Administration contract consolidates various current institutional support service contracts previously awarded the company, which is a joint venture of Rede Inc. and Critique Resource Consulting Inc.

NASA said offices supported by the contract include the space shuttle, international space station, launch services and the Constellation programs.

Services will include non-technical administrative support such as technical training, clerical support, financial management support, personnel program activity, employee development and training, employee benefits and records management.

Asian markets fall hard

TOKYO, March 17 (UPI) -- Japanese markets fell hard Monday on the fire sale of Wall Street investment bank Bear Stearns Co. (NYSE:BSC-E) and the dollar's further weakening against the yen.

Bear Stearns, once a $159 per share behemoth, was sold Friday for $2 a share to rival J.P. Morgan, with the help of the U.S. Federal Reserve.

The dollar fell to 96.59 yen Monday, making Japanese imports more expensive for U.S. consumers, a factor critical to the Japanese economy.

The Nikkei average lost 454.09 points Monday to fall to 11,787.51 points, down 3.71 percent.

China's Hang Seng index fell 5.18 percent, down 1,152.50 points Monday to 21,084.61 points. India's Sensex index declined 6.47 percent Monday, off 1,020.40 points to 14,740.12.

The Australian stock exchange also declined Monday, dropping 115.30 points to 5,173.20 points, off 2.18 percent.