* MSCI Asia ex-Japan slides 3.5 pct to 9-month low
* U.S. Treasury yields hit 15-mth high, underpin dollar
* China "flash" PMI hits 9-month lows
* Asian credit market spreads widen 23 points
TOKYO/SYDNEY, June 20 (Reuters) - Asian markets buckled badly on Thursday after the Federal Reserve heralded an eventual end to free money and China turned the screw on credit even as factory activity in the world's second largest economy hit a nine-month low.
Shares, currencies and commodities all crumbled as spooked investors rushed to unwind crowded trades in emerging markets.
Among a host of unwanted milestones: Asian stocks outside Japan suffered their biggest daily loss since late 2011, key lending rates in China reached historic highs and India's currency carved out a record low.
"Kaboom is a better word to describe the market," was the judgement of a trader at an overseas bank in Manila.
MSCI's broadest index of Asia-Pacific shares outside Japan sank 3.5 percent, its biggest one-day percentage drop since November 2011.
Australia's bourse tumbled 2.3 percent while South Korean shares shed 2.1 percent to seven-month lows. Stocks in Hong Kong fell 2.5 percent and Shanghai lost 1.4 percent.
The stress was clear in Asian credit markets, where the spread on the iTraxx Asia ex-Japan investment-grade index widened 23 basis points, reflecting the rising cost of hedging against debt default.
The initial catalyst for the carnage was Fed Chairman Ben Bernanke who pulled few punches when signalling a likely end to asset buying by the middle of 2014.
"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.
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.
Indeed, the dollar was already up at 97.07 yen for a gain of 2 percent in as many sessions.
Adding to the pain, a closely-watched measure of Chinese manufacturing took a surprise spill and only added to evidence of tepid economic growth in the second quarter.
The "flash" HSBC China Purchasing Managers' Index contracted further to 48.3 in June from May's final reading of 49.2, its weakest reading since September.
Hardly helping was a surge in interbank lending rates as the People's Bank of China (PBOC) tightened liquidity even as banks clambered for cash.
"That hardline stance suits the recent government policy of clamping down on non-essential businesses by financial institutions, such as shadow banking, wealth management, trust operations and even arbitrage," said a trader at a major Chinese state-owned bank in Shanghai.
The Australian dollar cratered at a three-year low of $0.9237, having shed three cents in little more than a day, reflecting China's importance as the resource-rich country's single biggest export market.
The Philippine peso lost 1.1 percent to 43.700 per dollar, the weakest since June last year, while South Korea's won fell 1.4 percent to 1,146.6.
"If you put the Chinese numbers together with the policy statements from both, what's clear to me is that the emerging market currencies, particularly with a commodity-bias, will continue to go down," said Mark Matthews, head of Asia research at Julius Baer.
DEVELOPING OVER EMERGING
Matthews did see a glint of light on the horizon should the Fed's confidence in the U.S. economy prove prescient.
"If we are moving towards a more normalized environment, people need to remember that it's a good thing the U.S. economy is growing," he said.
"The world we've got accustomed to in the last 10 years of crisis and central bank intervention is metamorphosing into one of growth and less central bank intervention."
However, that also meant developing markets would likely outperform emerging markets for the foreseeable future.
In a rare turn, Japan was one of the developed nations that seemed to be doing better. A Reuters survey of manufacturers out Thursday showed confidence at its highest since early 2011, and that followed surprisingly upbeat news on exports.
As a result, Japan's benchmark Nikkei stock average was off a relatively modest 1.2 percent.
The resource-poor nation is also set to benefit from lower global commodity prices. U.S. crude futures were down $1.49 a barrel at $96.75 a barrel while Brent fell $1.47 to $104.65.
U.S. gold futures for August delivery fell more than 2 percent to $1,346.00 an ounce in Asia on Thursday. Spot gold fared a shade better at $1,346.66 an ounce.
(This report replaces separate afternoon market reports from Hong Kong, mainland China, South Korea and Taiwan).