UPDATE 7-S.African court clears Vodacom for listing

* Court throws out union, watchdog injunction request

* Vodacom says listing to proceed as planned on Monday

* COSATU union, Communists urge consumer boycott (Adds background, details)

By Gugulakhe Lourie

PRETORIA, May 17 (Reuters) - A South African court threw out on Sunday a bid by powerful trade union federation COSATU to block Monday's listing of mobile phone company Vodacom, one of the country's largest stock exchange debuts.

"I am not going to issue an interdict to COSATU," Judge John Murphey told the High Court in Pretoria. "I dismiss the application with costs."

COSATU said it was "disappointed and angry" at the decision, which will allow British mobile phone giant Vodafone (VOD.L) to increase to 65 percent its stake in Vodacom, the largest mobile operator in Africa's biggest economy.

The trade union group, which regards new President Jacob Zuma as a political ally, urged consumers to boycott Vodacom, which some analysts have valued at 70 billion rand ($8.1 billion).

"The fight goes on. We shall use all possible legal means to prevent the sale of this South African company and to protect the jobs of the workers," COSATU spokesman Patrick Craven told reporters outside the court.

Vodacom said it welcomed the decision and looked forward to the listing as planned.

Halting the deal on its eve would have dealt a huge blow to South Africa's credentials as an investor-friendly emerging market and intensified fears of resurgent union clout under ANC leader Zuma, inaugurated as president on May 9.

An injunction would also have hit the rand ZAR=D3 since Vodafone has already brought 20.5 billion rand ($2.4 billion) into the country to buy a 15 percent stake in Vodacom, the latter's lawyers told the hearing.

The listing is the final part of a plan by fixed-line operator Telkom (TKGJ.J) to get rid of its 50 percent stake in its mobile subsidiary, jointly owned by Vodafone.

Under the plan, Vodafone agreed to buy a 15 percent stake from Telkom, giving it a controlling 65 percent holding. Telkom will then distribute its remaining 35 percent to shareholders.

'NO CASE'

COSATU and the South African Communist Party (SACP), officially part of the ANC-led government, have long opposed the deal on the grounds it threatens jobs and cedes control of a major South African company to a foreign corporation.