Second wave of UK postal strikes starts

* British postal workers start three days of strikes

* Backlog of undelivered mail stands at 2 million items

* Business leaders: "Madness" to strike during recession

By Peter Griffiths

LONDON, Oct 29 (Reuters) - More than 40,000 British postal workers began a second wave of one-day strikes on Thursday after Royal Mail managers and union leaders failed to reach a deal to end the long-running dispute over pay, jobs and modernisation.

The Communication Workers Union (CWU) said 43,700 drivers and mail centre staff across Britain walked out from 0400 GMT.

They will be followed on Friday by a small group of 400 workers in the towns of Plymouth, Stockport and Stoke and then on Saturday by 77,000 delivery and collection staff nationwide.

The strike went ahead after negotiations between CWU officials and Royal Mail managers in London collapsed for reasons that both sides agreed not to disclose.

"We remain available for discussions at any time," CWU Deputy General Secretary Dave Ward said in a statement. "We remain committed to reaching an agreed resolution."

The backlog of undelivered mail from two strikes last week stands at 2 million items, the Royal Mail said.

Business Secretary Peter Mandelson has described the strikes as suicidal for a company that is losing 10 percent of its mail volume each year to private firms, the Internet, email and mobile phones.

Prime Minister Gordon Brown, whose Labour Party has received about 5 million pounds ($8.2 million) from the postal union since 2001, has called the strikes counter-productive.

Royal Mail, which is hiring 30,000 temporary staff to cope with the strike and the Christmas rush, condemned the action.

"We have repeatedly asked for a common sense approach that allows a strike-free Christmas while we talk about the future, yet even that seems too much for the CWU to accept," Royal Mail's Managing Director Mark Higson said in a statement.

David Frost, head of the British Chambers of Commerce, said the strikes would harm businesses already struggling to cope with the recession.

"Disappointingly, it appears this madness is set to continue," he said. "No one is benefiting from ongoing industrial action and hard-pressed businesses are the innocent victims. With the country still in recession, this really is a poorly-timed strike." (Editing by David Holmes) ($1=.6081 Pound)