(Corrects 2nd bullet point to show 2-wk high, not 2-mth)

* Sterling hits 7-1/2-year low vs dollar on UK banking woes

* Euro up from 6-wk low vs dlr; hits 2-wk high vs pound

* Pound down 1 percent vs dollar at $1.3755 <GBP=D4>

* FTSE down 1.5 pct by midday; Barclays shares down 20 pct

By Tamawa Desai

LONDON, Jan 21 (Reuters) - Sterling tumbled to fresh 7-1/2 year lows against the dollar on Wednesday as UK banking shares took another beating, while the euro broadly edged higher.