* Prospects for Africa's biggest economy deteriorated - Fitch
* Fitch move expected after S&P cut in October
By Daniel Bases and Caryn Trokie
NEW YORK, Jan 10 (Reuters) - Fitch Ratings on Thursday cut South Africa's sovereign credit rating to BBB from BBB-plus, citing rising social and political tensions and the inability of the government to implement effective reforms.
The rand weakened to a month's low against the dollar after the downgrade, which follows similar moves by rival agencies Moody's and Standard & Poor's last year and could hit government debt when the market opens on Friday.
The economic growth performance and prospects for Africa's biggest economy had deteriorated, affecting public finances and exacerbating social and political tensions, Fitch said in a statement.
"Subdued growth, coupled with rising corruption and worsening government effectiveness, have constrained the government's ability to improve living standards, reduce the 25.5 percent unemployment rate and redress historical inequalities as rapidly as the population demands," it added.
Fitch however changed the outlook on South Africa's credit to stable from negative, saying the country's credit strengths limited likelihood of a further potential downgrade over the typical two-year outlook horizon.
The Fitch move was largely expected after S&P cut South Africa's credit rating by one notch to BBB in October, with a negative outlook.
It cited concerns that mining strikes and social tensions could pressure the government to increase social spending, reducing already tight fiscal space and hurting growth.
A month earlier, Moody's had cut the rating to A3, which is still two notches above its rivals, citing worries about labor unrest and political instability in Africa's largest economy.
Economic growth and investor sentiment were hit by four months of violent wildcat strikes that swept through the crucial mining sector and left more than 50 people dead.
Finance Minister Pravin Gordhan said during his October budget presentation the strikes had cost the economy $1.1 billion.
Economic growth fell to 1.2 percent in the third quarter from 3.4 percent in the prior quarter. The effects of the strikes were expected to filter through to fourth quarter growth.
FITCH DOWNGRADE EXPECTED
"The deterioration across a slew of South Africa's rating metrics had made a Fitch downgrade fairly likely for some time now," said Razia Khan, regional head of research for Africa at Standard Chartered.
"Inflation is higher, the current account deficit is wider, fiscal conditions have deteriorated and debt levels are worse than they were previously."
While acknowledging some of the concerns behind the downgrade, like poverty and unemployment, South Africa's Treasury said some of the drivers included the financial crisis in the euro zone, which has slashed local exports due to close trade ties with the region.
"The government is consistently making efforts to address the concerns identified in Fitch's rating review which is aimed at mitigating growth and socio-economic concerns," it said in a statement.
Fitch was unswayed by the outcome from the ruling ANC's conference in December where it sought to reassure investors by pushing a development plan endorsed by several economists that includes measures to ease restrictive labour regulations.
The meeting also drove a stake through the heart of calls for a wholesale nationalisation of the country's mines and sent out a business-friendly message by electing one of the country's richest businessmen, Cyril Ramaphosa, as party deputy president.
"We ... thought the positivity after the conference could make (Fitch) pause. However, the underlying issues were deteriorating too much for them,' said Nomura analyst Peter Attard Montalto.
On the positive side, Fitch cited the generally sound banking system, a deep local bond market, long maturities on debt, floating exchange rate and inflation-targeting regime as an effective shock absorber.