June 24 (Reuters) - German business morale rose in June, a

survey showed on Wednesday, with companies more positive about

their current situation than they have been for nearly two

years.

The Ifo institute said its business climate index increased

to 85.6 compared to a revised 85.0 in May. The reading, which

showed only a slight improvement in future expectations, was in

line with a Reuters forecast.

"The German economy is hoping for an easing of the global

political situation," Ifo President Clemens Fuest said.

Business morale rose across all business sectors.

"Hope is back," said Carsten Brzeski, global head of macro

at ING. "However, before getting overly enthusiastic, even with

today's increase the Ifo index still remains below its pre-war

level."

ASSESSMENT OF THE CURRENT SITUATION DRIVES THE INCREASE

The increase in the headline index was in line with

expectations, said Robin Winkler, Germany chief economist at

Deutsche Bank Research.

"What is striking, however, is that this was mainly due to a

better assessment of the current situation," Winkler said.

Businesses were more satisfied with their current

operations, with the index rising to 87.0 from 86.1 in May.

The rise suggests that the impact of the U.S.-Israeli war on

Iran on activity is easing, said Harry Chambers, assistant

economist at Capital Economics.

The outlook for the coming months was also less pessimistic,

Ifo said, with the corresponding index rising to 84.1 from 83.9

in the previous month.

(Additional reporting by Reinhard Becker, editing by Thomas

Seythal and Philippa Fletcher)