German business confidence rose slightly in July, reflecting relief in Europe's biggest economy about the de-escalation in the Greece debt crisis, the Ifo economic institute has said.

The Ifo institute's closely watched business climate index rose to 108 points, the first increase in three months, from a revised 107.5 points in June, beating analysts' expectations, Ifo said.

After months of crisis talks and fears Greece would crash out of the euro common currency, euro zone ministers and Athens have agreed to resume talks for a third EU-IMF bailout.

"The preliminary easing of the Greece question has contributed to the improved sentiment in the German economy," Ifo president Hans-Werner Sinn said in a statement.

"Companies' assessments of the situation improved significantly after a damper the previous month. The business prospects too were somewhat more optimistic after three consecutive declines."