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...