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(Reuters) – Inc and Barnes & Noble Inc slashed prices on their rival electronic book readers on Monday, responding to intensifying market competition and the success of Apple Inc’s iPad.

Stock in both companies fell about 3 percent in afternoon trade as investors feared a looming price war.

Amazon announced a $70 price cut — from $259 to $189 — to its Kindle e-reader amid intensifying competition in the fast growing electronic books industry.

Amazon’s move came after Barnes & Noble introduced a new Wi-fi version of its "Nook" electronic book reader and lowered the price on another.

Barnes & Noble, the No. 1 U.S. specialty bookseller by sales, introduced a $149 Wi-Fi only version of Nook and reduced the price on its 3G compatible Nook to $199.

The move comes as Apple’s iPad, launched in the spring, has drawn many shoppers to its e-bookstore and Borders Group Inc gets ready to open its own e-bookstore.

Barnes & Noble introduced Nook in October. The company is set to report its fourth-quarter earnings next Monday.

Shares in Amazon were down 2.8 percent to $122.27, while Barnes and Noble stock was down 3.2 percent to $16.52.

(Reporting by Phil Wahba and Carolina Madrid)