Microsoft Corp is slashing the price of its high-end Xbox 360 model by $100 in the United States and 50 euros ($71) in Europe, upping the stakes in the game console fight this holiday season.

Microsoft will drop the price of the Xbox 360 Elite to $299.99, it said on Thursday, just days after Sony cut the rival PlayStation 3 to $299. In Europe, it will cost 249.99 euros, or 199.99 pounds ($324) in Britain.

The price on the entry-level Xbox Arcade model will stay at $199.99, and Microsoft will phase out its mid-range Pro console, leaving it with two models. The Pro will sell for $249.99 until supplies run out. The global price cut is effective Friday.

The Xbox is the No. 2 console in the United States, behind Nintendo's Wii, which sells for $249. But Xbox sales have showed strength this year, up 17 percent in the United States, the only console in positive territory.

Chris Lewis, head of Xbox Europe, said the cut would help Microsoft match or beat its 2008 performance, when it increased unit sales of Xboxes by more than 80 percent in Europe.

We expect them to be at least as good if not better, he told Reuters by phone. I do believe there will be a higher level of economic confidence than was the case last year.

Microsoft spokesman David Dennis said the price cut has been in the works for some time, and was not a response to Sony's move last week.

Rather, he said, the company hoped the price reduction would attract new buyers and simplify its product mix.

It really makes the decision for consumers a lot easier. They're either price conscious and they gravitate toward the Arcade or they the want the full Xbox 360 experience.

Game publishers such as Activision Blizzard have been clamoring for console price cuts, which help boost sales of software by increasing the installed base.

They are now getting their wish, as the industry remains mired in a months-long slump brought on by a lack of big-name releases and a recession that has pinched consumer spending.

Nintendo said it had no plan to cut the price of its top-selling Wii console.

(Additional reporting by Kiyoshi Takenaka in Tokyo; Editing by Phil Berlowitz and Dan Lalor)

($1 = 0.7024 euro = 0.6170 pound)

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