UPDATE 1-Microsoft cuts Xbox 360 prices in Europe

(Adds details, background and analyst comment)

SAN FRANCISCO, March 10 (Reuters) - Microsoft Corp (MSFT.O: Quote, Profile, Research) cut the prices of its Xbox 360 video game console in Europe by up to 28 percent on Monday to try to spur sales in a key battleground in the fast-growing industry.

The 80-euro decrease results in cuts of 18 percent to 28 percent across the three Xbox 360 models, bringing the cheapest Arcade version to 200 euros and the high-end Elite to 370 euros.

Prices reductions in Britain range from 20 pounds to 50 pounds.

"Xbox 360 is now mass market in Europe," Chris Lewis, vice president of Microsoft's interactive entertainment business in Europe, said in a statement.

The reductions come as Sony Corp's (6758.T: Quote, Profile, Research) PlayStation 3 appears set to capitalize on the company's recent victory in the high-definition DVD battle and on a slew of highly anticipated new games hitting the market this year.

"The PS3 has gained some momentum recently," Kaufman Bros analyst Todd Mitchell said, "and I think as you go into this summer before the fall, Microsoft has got to do what they can to shore up sales."

This was the second price cut for the Xbox in Europe in less than a year. Last August, Microsoft shaved 7 percent off the euro price of its low-end model and 13 percent off the main Premium model.

"The tide is kind of turning against the Xbox 360, so Microsoft has to be as aggressive as possible," Mitchell said.