UPDATE 4-SAfrica union threatens to strike for rate cuts

* Metalworkers union threatens strike for rate cuts

* Union vows action against commercial banks

* Ruling party ask unions to be patient

(Adds analyst comment)

By Alison Raymond and Michael Georgy

JOHANNESBURG, June 1 (Reuters) - A major South African trade union on Monday threatened mass strikes for bigger interest rate cuts after the ruling ANC cautioned that labour unrest could deepen the country's first recession in 17 years.

The metal workers, who also vowed to take action against commercial banks, made their threat two days before new President Jacob Zuma gives his first state of the union address against a background of global economic crisis.

"If matters are not resolved we will have mass rolling action," National Union of Metalworkers of South Africa General-Secretary Irvin Jim told a news conference.

While one of Zuma's biggest tests is how he handles investors, he must also deal with the trade unions which helped his rise to power after years of crises, corruption cases and ANC power struggles that he says nearly ruined him.

Markets fear Zuma will bow to pressure from increasingly assertive labour allies demanding more government spending and an economic shift to the left. He has promised continuity.

ANC spokeswoman Jessie Duarte urged unions to be patient.

"What will have to happen is an understanding that during a recessionary time there is a slight difference. That we might as a ruling party have to mediate and talk about all of us taking responsibility that the recession doesn't deepen," she told eTV.

BATTLE WARNING

By taking a tough stand on critical economic policies, NUMSA raised the stakes in labour's disputes with the government and made Zuma's balancing act between unions and investors trickier.

"I really do not think anyone is going to emerge completely happy out of this. It's easier if unions protest on ordinary labour issues," said political analyst Susan Booysen.

"If unions protest on issues like interest rates and budget deficits it is a completely different ball game and it can get to a point where it could be a clash."

In his address, Zuma is expected to explain that the government may take longer to deliver on its promises because it is constrained by the recession, said Duarte.

NUMSA, which says it has more than 260,000 members and is one of the country's three biggest unions, staged a protest at the Reserve Bank last month to demand a deep interest rate cut.

"We wish to condemn in the strongest terms the decision by the governor of the Reserve Bank of South Africa to refuse to accept a petition from NUMSA on Wednesday the 27th of May 2009. We find this act arrogant and unacceptable...," said Jim.

"We are warning him we have a battle on our hands".

The central bank cut its key repo rate by 100 basis points on May 28 to 7.5 percent, the lowest level in nearly 3 years.

Labour was quick to push its agenda after Zuma's May 9 inauguration. Powerful COSATU trade union federation, which says it has 1.8 million paid-up members, nearly blocked one of the biggest share listings in Africa's biggest economy.

It also threatened a public sector strike unless the government fulfilled promises it made in a 2007 wage deal.

Global woes have hit demand for South Africa's minerals and manufactured goods, with a knock-on effect on the whole economy.

But Zuma faces mounting pressure to deliver on pledges to create more jobs, and to combat corruption, one of the world's highest rates of violent crime, and the AIDS epidemic.

NUMSA has complained of the "capitalist crisis under way". It strongly criticised Reserve Bank Governor Tito Mboweni, who is respected by markets for his more transparent monetary policy and efforts to keep inflation in check.

"We do not believe Tito is the Father Christmas of this country. The interest rate cuts are not (enough)," said Jim.

NUMSA also criticised commercial banks.

"We are not happy with the banks, they are actually taking a lot of money from our people. Our next fight should be directed at the banks," said Jim. (Additional reporting by Pakama Ngceni, Writing by Michael Georgy; Editing by Giles Elgood)