* MSCI Asia ex-Japan slips 1.8 pct to fresh 9-1/2-month low
* Nikkei gives up early gains as China worry sets in
* China money market rates ease but remain elevated
* Dollar hits 2-week high against basket, hits commodities
* European shares seen consolidating
By Chikako Mogi
TOKYO, June 24 (Reuters) - Chinese shares dragged Asian bourses to a fresh 9-1/2-month low on Monday as investors worried about Beijing's economic and financial stability and markets scrambled to price in the Federal Reserve's plan to slow its stimulus drive later in 2013.
European stocks were seen consolidating after last week's losses, with financial spreadbetters predicting London's FTSE 100, Paris's CAC-40 and Frankfurt's DAX would open little changed.
But a 0.6 percent drop in U.S. stock futures pointed to a weak Wall Street open.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.8 percent to its lowest since early September, after posting its worst week since May 2012 with a drop of 4.5 percent last week. Most of the region's stock indexes are now well into oversold territory.
China bank shares led the downward spiral after official news reports at the weekend suggested Beijing would continue to address the risks of shadow banking, which was behind the central bank's withholding of funds to the money market last week.
The People's Bank of China bank exacerbated nervousness by saying that liquidity in the country's financial system is "reasonable." It has also pledged to "fine tune" existing "prudent" monetary policy.
Hong Kong shares fell 2.4 percent and Shanghai shares plummeted 5.4 percent. The Shanghai financials sub-index was down 7.1 percent, headed for its worst single day loss since November 2008.
"I think the market is expecting 'fine-tuning' to mean a tightening of liquidity moving forward, especially after the way official media talked about shadow financing over the weekend," said Cao Xuefeng, Chengdu-based head of research at Huaxi Securities.
China's volatile money market rates kept investors jittery about the intentions of the Chinese authorities, as the recent spike in market rates compounded fears of a sharper-than-expected slowdown in the world's second-largest economy.
China's weighted average overnight bond repurchase rate , a measure of the cost of funds, eased to 6.64 percent from Friday's close at 8.89 percent. The rate had been around 4 percent for much of 2013 until this month.
"The Chinese authorities are purposefully doing this to let investors be aware of the pain that must accompany the structural reforms the government is trying to pursue, so investors shouldn't be complacent about the government avoiding a hard landing," said Xiao Minjie, an independent economist in Tokyo.
Australian shares tumbled 1.5 percent, dragged by concerns about slowing growth in China, its main export market.
A weaker yen helped buoy Japan's Nikkei stock average in early trade, but the Nikkei surrendered gains and ended down 1.3 percent as investors remained skittish after last week's global market rout and the fresh tumble in Chinese stocks.
"The Chinese market changed the mood completely," said Kyoya Okazawa, head of global equities and commodity derivatives at BNP Paribas in Tokyo. "Global markets have just started pricing in the end of China's high-growth period and investors are backing away from emerging markets."
Going into the Fed's June meeting, investors continued to take money out of emerging-market fund groups in the week ending June 19, EPFR Global said on Friday.
Asian credit markets were also unsettled, with the spread on the iTraxx Asia ex-Japan investment-grade index widening by 20 basis points.
The dollar outshone all other asset classes and strengthened broadly, in turn weighing on dollar-based commodities prices, on the prospect of rising yields and an improving U.S. economy which has allowed the Fed to suggest a major policy reversal.
Financial markets sold off last week after Fed Chairman Ben Bernanke said that with the U.S. economy showing signs of recovery, the central bank may start scaling back its huge monthly bond-buying plan which was aimed at keeping bond yields down and supporting the economy.
The Fed's strong accommodative stance has also encouraged investment in riskier assets such as shares.
The dollar rose 0.6 percent against the yen at 98.48, steadily moving away from its 10-week low of 93.75 yen hit earlier in the month.
Traders said the prospect of diverging yield directions will support the dollar against the yen.
U.S. Treasuries extended last week's dismal performance, with the 10-year yield rising to 2.5928 percent to a near two-year high, after the benchmark yield posted its biggest weekly rise since November 2001 last week.
"A better economic outlook will eventually need to be priced into the short end of the yield curve. This suggests that there is a catch-up trade for the USD versus low-yielding currencies (such as the yen)," Barclays Capital said in a research note.
Against a basket of major currencies, the dollar index rose 0.4 percent to a two-week high after ending last week up 2.2 percent for its biggest weekly gain since early November, 2011.
Spot gold slumped 1.2 percent to $1,281.39 an ounce, approaching its lowest since September 2010 of $1,268.89 touched on Friday.
U.S. crude futures fell 0.4 percent to $93.32 a barrel and Brent shed 0.6 percent to $100.35.