* Emerging assets steadier after last week's steep downturn
* Ukraine CDS rise on IMF deal worries
* Kazakh bank Kazkommertsbank says will repay debt
* Icelandic crown untraded offshore after one control lifted
By Carolyn Cohn
LONDON, Nov 2 (Reuters) - Emerging assets largely stabilised on Monday after sharp falls in the previous session, though worries about Ukraine kept the country's debt insurance costs at elevated levels. The VIX measure of volatility posted its biggest one-day gain in a year on Friday on concern about the outlook for the final two months of the year, and riskier emerging assets suffered.
But some of that move ran out of steam on Monday, ahead of key rate decisions and data this week from the U.S. and euro zone.
"Friday looked quite scary but things look pretty stable today," said Beat Siegenthaler, emerging markets strategist at TD Securities. "Some of the currencies that suffered last week have recovered."
Benchmark emerging equities fell 0.58 percent from the U.S. close, after dropping more than 5 percent last week, the index's largest weekly fall since February.
The MSCI emerging equity index more than doubled between early March and late Oct 2009, but has now wiped out last month's gains.
Emerging sovereign debt spreads narrowed by 2 basis points to 321 bps over U.S. Treasuries, after widening around 30 bps in the past few weeks.
Ukraine's 5-year CDS prices continued to rise after the country's president on Friday signed a wages bill which the IMF said pushed the Ukraine's $16.4 billion bailout "off track".
The result was "very likely to be a delay in the $3.7 billion loan tranche release, past November"," said Simon Quijano-Evans, emerging Europe economist at Cheuvreux, in a client note.
Ukraine's five-year credit default swaps rose to 27 percent upfront from 26.8 percent on Friday and 23 percent on Thursday, according to CDS monitor CMA DataVision. The rand plunged in Asian trade due to selling by a Japanese margin trader, with dealers in Asia suspecting a mistaken trade may have sparked a 10 percent fall. The currency clawed back most of the losses but was trading down 1.50 percent at 7.8850 at 1142 GMT.
The Turkish lira hit 2-month lows but recovered ground after data showing Turkey's manufacturing sector expanded for a sixth consecutive month.
Upbeat regional and euro zone manufacturing surveys also supported eastern European currencies after recent falls.
Central bank decisions are due this week from Romania and the Czech Republic, as well as from the U.S. and euro zone central banks.
Romania is expected to cut rates by at least 25 basis points from the current 8.0 percent on Tuesday, according to a Reuters poll. The Czech Republic is expected to keep rates at hold at a record low 1.25 percent on Thursday, but a minority of analysts see a cut.
Kazakhstan's largest bank Kazkommertsbank quashed fears of default, saying on Monday it would this week repay a $470 million Eurobond.
Kazakh five-year CDS edged in slightly, to 247.5 bps from 249.3 bps at Friday's close.
Some analysts have feared more Kazakh banks could follow BTA and Alliance, which defaulted on bonds this year and are seeking to restructure their debt.
Iceland's crown remained untraded in offshore markets after Iceland's central bank at the weekend allowed investors to move proceeds overseas from investments made after Nov 1.
"This is only the very first step," said Siegenthaler.
"The first plan is for new investment -- you can buy Icelandic crown but not sell, and most people want to sell. There are still too many controls in place for the crown to trade."