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UPDATE 1-Fiat ratings unaffected by GM option delay -Fitch

(Adds further details from statement, other ratings)

LONDON, Oct 27 (Reuters) - Italian automaker Fiat Spa's senior unsecured rating was affirmed at BB with a negative outlook, credit ratings agency Fitch Ratings said on Monday.

The affirmation follows the announcement of a one-year delay in the start of Fiat's option to sell its car unit to General Motors Corp. until January 2005, the agency said in a statement. The option will now expire in July 2010.

"The postponement of the put option and the delay of any legal actions related to differing views on the validity of the put until 15 December 2004 will have no impact on Fiat's ratings," the agency said.

It said it believed the delay would not affect Fiat's intention to use the put option to strengthen cooperation between the two companies in the medium term.

"The negative outlook is based on the modest earnings prospects for the next two years, with the relaunch plan under way, as well as the substantial execution risk involved in the implementation of these initiatives," Fitch said.

"During this time, Fiat is expected to retain negative net free cash flow generation."

Fiat's BB rating from Fitch is two notches below investment grade.

Standard & Poor's rates the company at BB-, three notches below investment grade, while Moody's Investors Service rates the company at Ba3, also three notches into "junk" territory.