Sterling hits 2-1/2 yr low vs dlr on fresh bank stress
* Sterling hits 2-1/2 year low vs dlr at $1.7322 GBP= * Banking sector woes dominate on talk of funding for RBS
* UK industrial output data adds to poor economic picture
* RBA 100 bps rate cut builds talk of decisive BoE action
By Veronica Brown
LONDON, Oct 7 (Reuters) - Sterling slid to 2-1/2 year lows versus the dollar on Tuesday, as a fresh bout of fear blew through stock markets with reports that the UK government could be forced to provide funding for Royal Bank of Scotland (RBS.L: Quote, Profile, Research).
RBS shares fell almost 40 percent at one point and were last down 30 percent on the day at 103.9 pence, with Lloyds TSB (LLOY.L: Quote, Profile, Research) and Barclays (BARC.L: Quote, Profile, Research) also losing ground after the BBC said the three big banks had asked the Treasury for 15 billion pounds each.
The chief executive of RBS (RBS.L: Quote, Profile, Research) declined to comment on what he described as speculation of any action the UK government might take to help banks, including talk it might inject capital [nWLB2092]. Continued...
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