PRINCETON, New Jersey (Reuters) -New Jersey's commuter rail engineers walked off the job early on Friday after 11th-hour contract talks with the third-largest U.S. public transit system stalled ahead of a midnight strike deadline set for meeting union wage demands.

The first labor strike against the New Jersey Transit agency in more than 40 years went into effect at 12:01 a.m. EDT (0401 GMT) on Friday.

The Brotherhood of Locomotive Engineers and Trainmen, which represents 450 NJ Transit engineers who drive the agency's commuter trains, said a marathon 15-hour bargaining session on Thursday broke off when management negotiators walked out of the talks at 10 p.m.

The union announcement came as New Jersey Governor Phil Murphy and NJ Transit's Chief Executive Officer Kris Kolluri were holding a news conference. They told reporters talks had paused but that management remained willing to return to the bargaining table at any time.

"We must reach a final deal that is both fair to employees and affordable," Murphy, a Democrat, told reporters. "Let's get back to the table and seal a deal."

NJ Transit said the rail system was commencing "a safe shutdown" at 12:01 a.m., with no new departures started after that point, although trains already en route would finish their trips.

The strike, the first mass transit work stoppage to hit New Jersey since a three-week walkout in 1983, was expected to idle trains serving hundreds of thousands of commuters in New Jersey and New York.

The agency said in a statement it would increase bus service on existing lines and charter private buses to operate from several satellite lots to help ease the impact but warned buses would only be able to handle around 20% of rail customers.

The looming strike had already prompted the agency to cancel trains and buses to MetLife Stadium for pop star Shakira's concerts on Thursday and Friday nights.

NJ Transit also urged commuters to work from home on Friday, if possible. It was unclear how long the labor dispute might last.

Kolluri said the U.S. National Mediation Board had reached out to both sides to propose reopening talks on Sunday morning, but he said NJ Transit stood ready to resume negotiations anytime before that.

The union statement made no mention of when talks might be restarted. It said picket lines would go up at 4 a.m. at several locations across the rail system, including NJ Transit's headquarters in Newark, Penn Station in New York City, and the Atlantic City rail terminal.

The labor clash came weeks after negotiators had agreed on a potential deal in March, but the union's members voted overwhelmingly to reject it.

The union has said it is simply aiming to raise the engineers' salaries to match those at other commuter railroads in the region.

NJ Transit cannot afford the pay raises that the engineers are seeking because 14 other unions that negotiate separate labor contracts with the agency would demand the same, higher wage rates for their members, Kolluri told reporters.

"I have always said that any deal we reach would have to be fair to our engineers and fiscally responsible without burdening our riders or the taxpayers," Kolluri said.

(Reporting by Joseph Ax in Princeton, New Jersey; Additional reporting by Steve Gorman in Los Angeles; Editing by Aurora Ellis, Christian Schmollinger and Lincoln Feast.)