(Recasts with resumption of talks)

By Muchena Zigomo

JOHANNESBURG, June 4 (Reuters) - South African President Thabo Mbeki's government said on Monday it had tabled a new offer to end four-day-old public sector wage strikes and that negotiations with unions had resumed.

Earlier, the powerful COSATU union federation said unions boycotted talks after police fired rubber bullets that injured striking nurses at a Durban hospital. But police superintendent Vincent Mdunge said stun grenades were used and no one was hurt.

Government officials fear mass action -- the strikes began on Friday -- could trigger further rises in inflation and hurt Africa's biggest economy.

The government made the offer to public sector unions whose members have not had a pay rise since 2004, but the proposed pay increase had already been firmly rejected by unions before the latest round of negotiations.

"The government and the public sector unions met ... in an effort to resolve the impasse on wage negotiations," a government statement said.

The Public Service and Administration Ministry said in a statement the government had offered a 6.5 percent wage rise to unions, which have said they will stick to their demands for a 12 percent increase.

The government was also offering revised salary structures and improved benefits, said the ministry.

COSATU, a major force in a political alliance with the ruling African National Congress, represents 60 percent of civil servants, including police and teachers, and has the numbers to paralyse major cities.

FEARS

The strikes have increased fears public sector services could be crippled and they could put pressure on the government to show it is improving conditions for impoverished South Africans.

COSATU has accused the government of favouring big business over the poor under its free-market economic policies.

Business is booming in South Africa but civil servants say they have not had a pay rise since one that ended a major public service strike in 2004.

Anger boiled over when an official body recommended Mbeki should receive a 57 percent pay rise in a country where the vast majority of black people still live in grim townships. He says socio-economic conditions have improved.

In a sign of growing frustrations, striking teachers tore up exam papers at a Cape Town school, the SAPA news agency said.

It quoted Western Cape education department official Cameron Dugmore as saying he was outraged over the incident. Union officials were not immediately available for comment.

Fikile Slovo Majola, general secretary of the National Education Health and Allied Workers Union, said government threats at the weekend to fire striking nurses would only undermine efforts to reach a resolution.

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