£299 PS3 imminent?

Consumer site

CVG

is reporting that several” off-the-record sources have assured it that Sony is preparing to counter the massive hype generated by Microsoft’s release of Halo 3 by launching a stripped down 40GB version of the PS3 for 299 in the UK.

Sky News is apparently reporting that the unit will be missing several of the features currently boasted by the 60GB model – such as backwards compatibility and USB ports.

Meanwhile, Next-Gen reports that Sony is turning to PlayStation2 producer FoxConn to produce the new hardware.