* MSCI Asia ex-Japan slides 2.8 pct to 9-month low
* U.S. Treasury yields hit 15-mth high, underpin dollar
* China "flash" PMI hit 9-month lows
* Asian credit market spreads widen 23 points
By Chikako Mogi
TOKYO, June 20 (Reuters) - Asian shares tumbled to nine-month lows on Thursday as slowing Chinese manufacturing activity exacerbated sentiment already unnerved by the U.S. Federal Reserve Chairman Ben Bernanke confirming the Fed would begin reducing its stimulus spending later this year.
The "flash" HSBC China Purchasing Managers' Index contracted further to 48.3 in June from May's final reading of 49.2, hitting its weakest level since September as new orders faltered, reinforcing signs of tepid economic growth in the second quarter.
"The Chinese data confirms views that the economy is vulnerable and could heighten the possibility of some policy action to ease investor jitters," said Hirokazu Yuihama, a senior strategist at Daiwa Securities in Tokyo.
"It doesn't help markets, with the data coming after the Fed reinforced worries about funds leaving this region and repatriating back to the U.S.," he added.
MSCI's broadest index of Asia-Pacific shares outside Japan slid 2.8 percent after the data, its biggest one-day percentage drop in 13 months and lowest since May last year. The drop was around 2.5 percent before the Chinese data.
Australian shares tumbled 2 percent while South Korean shares fell to seven-month lows. Hong Kong shares fell 2 percent and Shanghai shares slipped 0.9 percent.
The Australian dollar took a beating, falling to a low of $0.9240 after the Chinese data, as China is Australia's largest export market. The Aussie had already been hit by Bernanke's comments, sinking more than 2 percent to below $0.9300 for the first time since September 2010. The Aussie has been sold not only as a commodity currency but also as a proxy for emerging markets.
Asian credit markets also tumbled, with the spread on the iTraxx Asia ex-Japan investment-grade index widening by 23 basis points, reflecting the rising cost of hedging against debt default.
"We knew Asia would be pretty shaky if Ben had shown any signs of wanting to taper sooner than later, and so yes our credit market is melting," a trader said.
U.S. stocks tumbled more than 1 percent on Wednesday and benchmark 10-year U.S. Treasury yield surged to 2.37 percent, a fresh 15-month high, while the dollar advanced broadly on the back of the rising yields.
Bernanke said on Wednesday the U.S. economy is expanding strongly enough for the Fed to begin slowing the pace of its $85 billion monthly purchases of Treasuries and mortgage-backed securities, with the goal of ending it in mid-2014. But he also noted the central bank would withhold from tapering if economic conditions deteriorated.
"Bernanke was more explicit than markets had expected. Rising U.S. yields will spur broad dollar buying. The dollar's direction is now set," said Yuji Saito, director of foreign exchange at Credit Agricole in Tokyo.
"Volatility may stay high until bonds and stocks stabilise, but once the initial round of reaction subsides, markets are left with a clear direction," Saito said.
He said the contrast between Fed's shrinking balance sheet and the Bank of Japan's rapidly expanding holdings would spark the dollar to resume its climb against the yen.
Bernanke first raised the idea of a sooner-than-expected tapering on May 22, triggering global financial market turmoil especially in emerging markets, as the Fed's massive bond-buying programme has been a driving force behind the rally in risk assets globally.
Investors have been unnerved by the prospect of emerging economies or risk assets such as shares being undermined by outflows of money as the Fed curbed its stimulus, but others have noted that a stronger U.S. economy will eventually underpin investor sentiment and global economies.
"(Reduction of stimulus measures) is something the market has to get over. You cannot ride on four-wheel bicycles forever," said Kim Hyoung-ryoul, a market analyst at Kyobo Securities. "In time, confidence in U.S. economy will be restored ... we may see some short-term volatility as money will likely flow to U.S. markets."
Japan's benchmark Nikkei stock average fell 1 percent.
The dollar was up 0.1 percent against the yen at 96.53 after rising to a high of 97.03 yen on Wednesday, moving away from its 10-week low of 93.75 yen hit last week. It remained well below last month's 4-1/2-year peak of 103.74 yen.
The euro eased 0.2 percent at $1.3272, off a four-month high around $1.3418 hit on Wednesday.
U.S. gold futures for August delivery fell more than 2 percent to $1,338.60 an ounce in Asia on Thursday. Spot gold fell 0.6 percent at $1,343.51 an ounce.
U.S. crude futures were down 0.9 percent at $97.40 a barrel and Brent also fell 0.9 percent to $105.22.