SEGA doing Sonic racing game for Natal?

SEGA is working on a Project Natal racing game based on Sonic the Hedgehog.

That's according to Joystiq, which claims Sonic Free Riders will be released through Xbox Live Arcade.

"Players will supposedly steer an on-screen avatar via bodily movement, and will acquire weapons by reaching out toward the screen, and attack other racers by motioning towards them," according to the site.

When contacted this morning SEGA UK said it had no comment.

Project Natal will be fully unveiled at E3 in around 10 days' time - first at a premiere event on Sunday 13th June featuring Cirque du Soleil, and then at Microsoft's traditional E3 briefing on the morning of 14th June at 10am PST / 6pm BST.

Rumours have it that it will be priced at around £100 and that it will be renamed "Wave", but other than that and a few winks and nudges from publishers details have so far remained under wraps.

Many publishers Eurogamer has spoken to have said they are working on Natal titles but that they are bound by super-strict agreements with Microsoft not to release any details - even off the record - about the games they're making.

Microsoft has previously said to expect its "full line-up" at E3, and that the controller-free controller will be out this year, although recent claims by a Saudi Arabia-based spokesperson that we will "definitely" see it in October were dismissed as conjecture.