* US waived sanctions on Iran for 60 days from Monday

* Bahreini disputes assertion on oversight of unfrozen funds

* Envoy says only Iran will decide on use of assets

By Olivia Le Poidevin

GENEVA, June 23 (Reuters) - Iran alone will decide how to

use assets that are unfrozen under a deal with the United

States, an Iranian envoy said on Tuesday, denying Washington

would have any control over the funds or that they must be used

to buy U.S. commodities.

The U.S. waived sanctions on Iran for 60 days from Monday after

the talks in Switzerland on turning an interim deal into a

lasting peace agreement. Frozen Iranian assets worth about $12

billion are expected to be released under the initial accord.

Vice President JD Vance said on Monday the U.S. and Qatar would

have control over the funds when they are unfrozen, and that the

money ⁠could be ​spent on U.S. corn, soy and wheat.

Ali Bahreini, Iran's ambassador to the United Nations in

Geneva, said on Tuesday the two sides had held "very good talks"

but challenged Vance's statement on use of the assets.

"Iran is the only country to decide what to do with its assets,

which are going to be defrozen, and so I reject any claim about

that if there would be any role for any other country to have an

influence on those decisions or on those processes," Bahreini

told reporters in Geneva.

He said two working groups would be established in the

coming days to discuss the removal of sanctions against Iran and

issues related to Iranian nuclear activities.

Iran's frozen assets largely consist of oil revenues and

central bank reserves trapped overseas, built up over years of

sanctions.

Bahreini said there would be some technical arrangements

made by Washington and Doha, because the assets were frozen by

the U.S., and some are in Qatar.

"Certainly Iran does not allow them to have further

influence on the other processes, which have been related to

buying the commodities and importing them. That is something

that Iran, and only Iran, will decide," he said.

LEBANON A 'RED LINE'

Bahreini said the lifting of sanctions on the sale of Iranian

oil and chemical products was a test which could be extended to

other items and that Iran sought the complete removal of

sanctions.

Bahreini also underlined the importance to the U.S.-Iranian

deal of fighting ending in Lebanon, where U.S. ally Israel has

been battling Iran-aligned Hezbollah militants.

"Iran's 'red line' is any more attack against Lebanon," he

said, urging Washington to "use all its leverage" on Israel to

halt the violence.

A ceasefire has largely held in southern Lebanon since Sunday,

but Lebanon's Civil Defence and state media said Israeli gunfire

had killed two people there on Tuesday. Hezbollah said the

incident violated the ceasefire.

The Israeli military said it had "struck armed terrorists who

posed an immediate threat" to soldiers in southern Lebanon, but

it was not clear if this was the same incident.