WASHINGTON (Reuters) - President Barack Obama intervened on Thursday in stalled contract negotiations at the largest U.S. freight railroads, heading off a potential strike by locomotive engineers that could have hit the U.S. economy.

Signing an executive order to create an emergency board to help resolve the dispute, Obama cited the vital economic importance of rail freight amid faltering economic growth.

"It's in our national interest to make sure our freight rail system runs smoothly, since a disruption could affect businesses across the country and cause unnecessary damage to our already-fragile economy," he said in a statement.

Talks between 11 unions representing more than 80,000 workers and a group overseeing negotiations for CSX Corp, Norfolk Southern, Union Pacific and Burlington Northern Santa Fe -- owned by Warren Buffett's Berkshire Hathaway Inc -- faltered in September.

More than two dozen smaller railroads are also involved in the negotiations and a strike could have begun on Friday if the White House had not acted.

Obama named five individuals he intends to appoint to the emergency board, which the White House said would hear evidence and deliver its recommendations on how to solve the dispute within 30 days.

The five were Ira Jaffe, Roberta Golick, Joshua Javits, Gil Vernon and Arnold Zack. All have extensive experience in labor arbitration, the White House said.

Government intervention is permitted under federal law in railroad and airline disputes if an impasse or potential strike is considered damaging to commerce.

The National Mediation Board has overseen rail talks for more than a year and has already notified the White House that mediation had failed.

That cleared the way for possible union strikes at 12:01 a.m. EDT on Friday unless the Obama administration acted to head them off.

The Brotherhood of Locomotive Engineers and Trainmen representing nearly 25,000 workers is the only major union to have authorized a walkout.

(Reporting by John Crawley and Alister Bull; Editing by Peter Cooney)