Nokia has cut the prices of its smartphones in Europe in an attempt to slow the decline in its share of the higher end of the market, two industry sources said on Tuesday.

One of the sources with direct knowledge of Nokia's pricing said the steepest cuts of around 15 percent were made on prices for the company's flagship model, the N8, the multimedia phone C7, as well as the business user-targeted E6.

Other price cuts were smaller, both sources said. There are no very big cuts per model, but the scale -- across the portfolio -- is unseen for a very, very long time, said one of the sources, who works at a European telecoms operator.

Shares in Nokia dropped sharply on the news and were 2 percent lower at 4.35 euros by 1256 GMT (8:56 a.m. ET).

A Nokia spokesman declined to comment on specific prices and said changes were part of its normal business.

It's business as usual, he said.

Analyst Carolina Milanesi from Gartner said the price cuts were not too surprising as Nokia has indicated that it would be more aggressive on pricing to keep users from defecting.

They should discount older products including the N8, the C7 and the C6, and ship the new ones at a very aggressive price too, Milanesi said.

The Finnish company is expected to report losses for the second and third quarters this year as its aging smartphone range is rapidly losing market share to phones running on Google's Android operating platform.

Nokia's share of the smartphone market fell to 25.5 percent in the first quarter from 39 percent a year earlier, according to research firm Gartner, and many analysts expect the share to fall further during 2011.

(Reporting by Tarmo Virki; Editing by Greg Mahlich)

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