The gulf between the RMT union and Railtrack, the state-owned company which runs the infrastructure, widened as both attended separate sessions with officials at the conciliation service Acas.
However, both sides are likely to decide today to press ahead with a more formal conciliation process.
As the rail industry prepared for what are likely to be tough negotiations, leaders of 1.5 million local authority employees warned of industrial action in protest at an 'insulting' 3.5 per cent pay offer phased in over 19 months.
The annual conference of the moderate Society of Telecom Executives in Bournemouth also threatened strikes if any of their 21,000 members at BT are made compulsorily redundant. The company has warned that it might need to shed up to 6,000 middle managers and has not ruled out compulsory severance.
Both sides in the rail industry dug into what looked like mutually exclusive positions. Railtrack made it clear that there was no possibility of payments for productivity increases already achieved, while the RMT union insisted on 'up-front' money for past improvements.
David Armstrong, human resources director at Railtrack, said the 4,000 signal box staff had already been compensated for higher productivity by being placed in higher grades and by allowances for new technology.
However, Jimmy Knapp, leader of RMT, argued that there had been no consistency in the approach and many of his members had received nothing for operating more sophisticated equipment and dealing with more traffic.
Mr Armstrong wrote to Mr Knapp yesterday expressing keenness to hold substantive negotiations.
More than 700 workers on the pounds 300m Severn crossing project were dismissed yesterday after a 24-hour strike over bonus payments.