* Sterling hits 7-½ yr low vs dlr, euro marks six-week low
* Yen reverses gains after U.S. stock futures rise
* Remarks from ECB Trichet eyed for hints on rate move
By Kaori Kaneko
TOKYO, Jan 21 (Reuters) - Sterling and the euro recovered from earlier losses on Wednesday but concerns persisted over losses in the U.K. banking sector and a deepening recession in the euro zone.
Sterling earlier hit a 7-½ year low and the euro touched a six-week trough against the dollar on UK banking woes before both European currencies gained a reprieve as traders covered short positions.
The yen reversed gains against major currencies after Dow futures rose as risk aversion eased.
Traders said the euro would likely stay in ranges in the Asian market as they awaited remarks by European Central Bank President Jean-Claude Trichet later on Wednesday.
"The market has a notion that the ECB is behind other central banks in taking measures to handle the weak economy. This is one reason the euro is being weighed down," said Akira Takeuchi, manager at Chuo Mitsui Trust and Banking.
"Market players are looking to Trichet for hints about monetary policy moves at the ECB's next meeting in February," he said.
Traders said other factors that could have an impact on currencies include UK labour market data and the Bank of England's minutes of its January 7-9 monetary policy committee meeting. Both are due later on Wednesday.
Sterling fell in early trade to $1.3815, its lowest since mid-2001. It later recovered to $1.3980, up 1.0 percent from late U.S. trade.
The British pound was at 126.00 yen, up 0.3 percent from late U.S. trade. It earlier sank to a record low of 123.95 yen.
The euro climbed 0.8 percent to $1.2986 after earlier hitting a six-week low of $1.2845 on trading platform EBS.
The euro rose 0.9 percent to 116.90 yen, rebounding from a three-month low of 115.30 yen.
The dollar was up 0.2 percent at 89.98 yen.
Wall Street on Tuesday ushered in the Barack Obama presidency with a record Inauguration Day drop on Tuesday amid fresh signs the global bank crisis was far from over.
Obama pledged bold and swift action to bring new life to the U.S. economy but did not provide details on economic crisis measures in his inauguration address.
"U.S. stock losses reflected a view that it will take time before effects from the new administration's economic stimulus package are felt. So we need to see if U.S. shares, notably banking shares, extend losses or turn resilient," said Takeuchi at Chuo Mitsui.
Traders said the U.S. Senate's hearing for Timothy Geithner, Obama's choice for Treasury Secretary, will be another focus.
The White House said on Tuesday that it expected the Senate Finance Committee to vote on Thursday on the nomination of Geithner.
Investors were also looking ahead to major U.S. corporations' earnings as well as housing-related related data this week. (Editing by Brent Kininmont)