LucasArts has just finished making a first showing of its brand new PS2 and Xbox action title, Mercenaries, at a London event, and revealed that the Pandemic-developed third-person shooter - previously known only by its internal moniker Project Y - will use the Havok physics engine that so endeared us to Max Payne 2, and stunned us with its role in Valve's much celebrated E3 presentation of Half-Life 2 last year.

As regular readers will know from our previous report on the subject, Mercenaries sees four armies fighting over the remains of North Korea in the aftermath of a catastrophic conflict. One onlooker who made it to today's presentation echoed recent sentiments that the game is more GTA than Ghost Recon, complete with a heavily influential role for the game's vehicles. Although in actual fact our source described it as "GTA crossed with Freedom Fighters: loads of guns and killings."

"You have one guy," he continued. "You go around and hire soliders, and the more stuff you blow up the more money you make and the more soldiers you can hire. It's really cool. There are different factions you can play off against each other. The Soviets, Russians, Chinese army and the UN all get involved. It looks very similar to EA's Freedom Fighters, but the Half-Life 2 style physics look beyond good."

As previously reported, Star Wars: Battlefront developer Pandemic Studios is handling Mercenaries for LucasArts, and although online support for the game has still yet to be confirmed, we half expect to see it in there - Pandemic certainly has the pedigree for it.

Mercenaries is expected to make a more significant appearance at E3, and we'll be there to tell you how it's shaping up...

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