By Sruthi Shankar

(Reuters) -UK stock markets on Wednesday rebounded from a sharp sell-off, with exporter-heavy FTSE 100 benefiting from a weakness in sterling as economic worries were compounded by a crisis in Boris Johnson’s government.

The FTSE 100 rose 1.2% to recover from its worst session in three weeks, boosted by shares of dollar earners such as AstraZeneca, Diageo and Unilever.

Sterling was hobbling near a two-year low hit on Tuesday after the abrupt resignation of finance and health secretaries, along with several in more junior roles, saying they could no longer stay in government after a series of scandals blighted the administration.

A weak pound has supported the internationally-exposed FTSE 100 this year despite spiralling inflation and growing concerns of a recession.

“The sterling weakness is definitely contributing to the relative outperformance of the FTSE 100 today,” said Ian Williams, economics & strategy research analyst at Peel Hunt.

“The top end of UK market is just not that UK exposed. Who the prime minister is isn’t going to make much of a difference to the fortune of the oil & gas or mining or global pharmaceutical stocks.”

The more domestically focussed FTSE 250 index added 1.1% after hitting a fresh 2020 low in the previous session.

Worries about a recession has hammered the midcap index, down nearly 22% this year as the Bank of England (BoE) tries to curb inflation that is likely to hit double digits later this year.

BoE chief economist Huw Pill said he would be open to voting for a larger move in interest rates than the 0.25 percentage point steps favoured so far by the central bank, if economic circumstances warrant.

Trainline surged 20.1% after the online ticketing group said there was a faster-than-expected recovery in the number of train passengers across Europe, prompting it to raise its annual outlook.

Recruitment firm Robert Walters climbed 4.1% after it predicted full-year profit above market expectations amid a recovery in permanent hiring globally.

Asset manager Abrdn surged 7.5% on launching a share buyback programme worth 300 million pounds ($359.16 million).

British banks such as HSBC, Standard Chartered and Barclays fell between 1% and 2.4% after the BoE warned the economic prospects for Britain and the world had darkened since the start of the year and told banks to ramp up capital buffers.

($1 = 0.8353 pounds)

(Reporting by Sruthi Shankar in Bengaluru; Editing by Sherry Jacob-Phillips and Arun Koyyur)