"The employer has not budged," said Claus Weselsky, head of the GDL trade union of train drivers, adding the mood before the talks was tense.

Deutsche Bahn had announced on Thursday it would make an improved offer after about 400 rail workers in several cities staged a one-day strike over pay and conditions.

GDL wants a 6.5 percent wage increase for around 12,000 train drivers. The Transnet and GDBA unions, which are in parallel negotiations with Deutsche Bahn, want a pay rise of 10 percent for the 130,000 employees they represent.

Deutsche Bahn had previously offered a 1 percent increase over two years.

Weselksy said if Deutsche Bahn did not move, the union would consider strikes.

GDL, which vies for members among train drivers with Transnet and GDBA, brought much of German rail traffic to a standstill during a series of strikes in 2007.

Alexander Kirchner, head of rail union Transnet, said Deutsche Bahn's offer was basically unchanged, and Klaus-Dieter Hommel of GDBA dismissed it as "a joke".

However, both union officials said they would continue to try and reach an agreement and that they were willing to continue talks on Saturday if necessary.