Sony are hatching plans to foil Microsoft's launch of Xbox 360 this November by slashing the price of the slim, second generation PlayStation 2, according to gaming site SPOnG, citing unnamed retail sources.

The rumour is that Sony will slash up to 40% off the current £105 price of the slimline PS2, reducing it to a street price of between £60 and £70 in time for the Christmas rush.

"You can expect significant reductions in the price of everything this Christmas, but most noticeable will be the PlayStation 2," the source told SPOnG. "We’ve been briefed to expect a price as low as £60 beginning at the start of December. Sony’s probably looking at a global price cut - around $100 in the States and a serious Platinum range announcement too."

This could prove quite a marketing challenge for Microsoft, with the Xbox 360 widely expected to be introduced at US$299 - up to three times the price of the PS2.