SAN FRANCISCO (Reuters) - Negotiators pressed ahead with a second day of talks Friday aimed at ending a six-day lockout of West Coast ports that has already sent economic problems cascading through the U.S. economy and overseas.

Port managers, represented by the Pacific Maritime Association, and the International Longshore and Warehouse Union representing some 10,500 dock workers from San Diego to Seattle, met in San Francisco after holding 12 hours of meetings Thursday without reaching agreement.

Officials said the talks resumed Friday morning after Thursday's marathon talks, which were described as both tough and constructive by negotiators.

"We are working. We are trying to find some way to resolve this problem. The federal mediator is in there doing everything he can to try to find some middle ground," said Steve Stallone, an ILWU spokesman.

The talks, brokered by the Federal Mediation and Conciliation Service, are homing in on the issue of how new technology will be introduced at West Coast docks -- a move port managers say is crucial to improving efficiency, but which union leaders fear may cost union jobs.

In Washington -- where new figures showed U.S. payrolls fell in September and unemployment dropped a notch -- U.S. Labor Secretary Elaine Chao said the Bush administration was concerned that a prolonged standoff could hurt parts of the economy.

"We continue to be very concerned about the situation on the West Coast," Chao told reporters in a conference call to discuss the latest U.S. jobs figures.

"There's no question that the port shutdown, if it continues, will be hurting specific sectors of the economy," Chao said, citing the farm sector as a vulnerable area.

Three Western governors Friday sent a letter to both sides urging them to solve the dispute quickly.

"At a time when our national and state economies are fragile and the nation is experiencing significant unemployment, the shutdown of our ports only exacerbates this problem and diminishes the chance for a swift economic recovery," said the letter, signed by California Gov. Gray Davis, Oregon Gov. John Kitzhaber and Washington Gov. Gary Locke.

CLOSED SINCE SUNDAY

The PMA ordered the ports shut Sunday after accusing the ILWU of staging illegal work slowdowns as talks for a new collective bargaining agreement broke down. It has said it will not reopen port facilities without assurances from the union that no more slowdowns will occur.

The union, which has denied staging slowdowns, has been working without a contract since July 1. It says it wants to resolve the dispute over technology before it agrees to any deal.

Federal mediators stepped in this week in an effort to break the deadlock, which has stranded billions of dollars worth of cargo and is causing increasing disruptions in the faltering U.S. economy, as well as ripples in overseas economies such as Japan's.

Economists have raised the alarm that a prolonged shutdown of West Coast ports -- which the PMA estimates is costing the economy $1 billion per day -- could be disastrous in the run-up to the U.S. holiday shopping season.

Business organizations, ranging from long-distance truckers and food processing companies to consumer electronics groups and retailers have asked President Bush to step in to force the ports to reopen.

Bush, who could ask federal courts to order the ports open by invoking the 1947 Taft-Hartley Act and imposing an 80-day "cooling off" period on the dispute, has refused comment on whether he would intervene.

The port shutdown has already sent serious economic problems rippling across the nation as rail cargo to the West Coast slowed down or halted, a major auto plant shut down and as many as 160 cargo ships stood idle off West Coast ports.

The largest auto manufacturing plant on the West Coast, a joint venture between General Motors Corp. GM.N and Toyota Motor Corp. 7203.T called New United Motor Manufacturing Inc., or NUMMI, shut down production lines on Wednesday and Thursday amid a severe shortage of imported parts.

The Association of American Railroads halted cargo shipments bound for the 29 West Coast ports on Tuesday, while California farmers fretted that their fruit, cotton, nuts and wine -- which together earn some $5 billion per year -- may end up rotting in warehouses rather than sailing to markets in Europe and Asia.

By Andrew Quinn