The games console war between Sony and Microsoft is gathering steam with both companies cutting the price of their machines in Europe by around 17%.

As from Friday, Sony's Playstation 2 will cost �169.99 in the UK, while Microsoft's Xbox will retail at �159.99. Nintendo's GameCube will continue to cost �129.

The price cuts were announced within an hour of each other and come in the crucial run-up to the Christmas sales period.

All three video game giants plan to step up sales and marketing initiatives to cash in on a global games market that is worth millions of dollars.

"The video games industry is more robust than ever this year and new consoles and games are expected to dominate Christmas wish lists," said Sandy Duncan, Vice-President of Xbox Europe.

Booming area

A recent study by industry experts Games Analyst estimated that sales of consoles and games in Europe would reach $7.5 billion by the end of the year.

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Other estimates have placed total global sales for the booming games sector at US$31 billion.

The latest price cuts are likely to bolster the Playstation's position as the best-selling console in the world. Sony has sold more than 30 million units since its launch in March 2000.

"With over 145 more outstanding games due in the shops between now and Christmas, there has never been a better time to buy a PlayStation 2," said President of Sony Computer Entertainment Europe Chris Deering.

Sony has said it expects to ship another 5.8 million PlayStation 2s over the next six months in Europe, Australia and the Middle East.

Nintendo's GameCube is the second best-selling console after the PS2, with the Xbox is lagging in third place.

It has announced that it had sold one million GameCubes in Europe in the 11 weeks since the European launch in early May.

The company expects sales in Europe to reach three million by the end of the year.

As part of its sales drive, it aims to have 100 game titles for the console in the shops in time for Christmas.

Expensive console

Microsoft's Xbox got off to a sluggish start until a price cut earlier this year boosted sales.

By the end of June, Microsoft had sold just under four million consoles since launch in November last year.

Console makers traditionally lose money on the sales of their hardware, which they make up with royalties of between �5 and �10 on every game sold.

The Xbox is more expensive to produce than the Playstation 2. Analysts estimate that Microsoft is losing between US$76 and US$105 on every Xbox sold.