* Exports rise 0.7% m/m, imports fall 1.5%
* Readout bucks expectations for exports to decline
* Ray of hope for economy caught in trade conflict cross fire
* But trade group says data "no reason to give all-clear"
* Business with US going well, says foreign trade association (Adds reaction from industry groups)
By Paul Carrel
BERLIN, Sept 9 (Reuters) - German exports unexpectedly rose in July, data showed on Monday, but business groups said tariff disputes and Brexit uncertainty still posed risks to Europe's largest economy as it teeters on the brink of recession.
Exports rose 0.7% in July on a seasonally adjusted basis, while imports fell 1.5%, the Federal Statistics Office said. The trade surplus rose to 20.2 billion euros ($22.3 billion) after a downwardly revised 18.0 billion euros the month before.
A Reuters poll of economists had pointed to a 0.5% drop in exports and a 0.3% fall in imports, while the trade surplus was expected to come in at 17.5 billion euros.
"The small rise in exports in July is no reason for euphoria about foreign trade," said Volker Treier, economist at the DIHK Chambers of Industry and Commerce.
"Uncertainties persist for business, mainly due to the smouldering global trade conflicts and the still unclear Brexit (path)."
White House economic adviser Larry Kudlow said on Friday that the U.S.-China trade conflict could take years to resolve, although Washington wants "near term" results from talks in September and October.
Monday's stronger-than-expected German export figures cut against the grain of a recent run of weak data from Europe's largest economy, which has fuelled concerns that it could tip into recession in the July-September period.
Against that backdrop, the European Central Bank is expected to deploy fresh stimulus at its policy meeting on Thursday.
Germany's gross domestic product contracted by 0.1% quarter-on-quarter in the second quarter on weaker exports, with the decrease in foreign sales mainly driven by Britain and below-average demand from China.
Economists generally define a technical recession as at least two consecutive quarters of contraction.
RAY OF SUNSHINE
Monday's data showed that in the January-July period, German exports rose by 1.0%, with the strongest contribution coming from markets beyond the European Union, which registered growth of 2.9%.
The BGA foreign trade association said that in contrast to business in Europe, which was being hampered by Brexit uncertainty, business with the United States was going well.
"But this is no reason to give the all-clear, because the many risks and confrontations in foreign trade and the general economic slowdown persist," BGA President Holger Bingmann said.
Chancellor Angela Merkel said on a visit to Beijing on Friday that the China-U.S. trade war was affecting the whole world and that she hoped it would be resolved soon.
With its sales abroad hit, a global economic slowdown and an increasingly chaotic run-up to Brexit, the bulk of Germany's growth momentum is now being generated domestically -- a dependency that leaves it exposed to any weakening of the jobs market.
Seasonally adjusted unemployment rose in August, eroding a pillar of growth that has helped support Germany's traditionally export-driven economy.
The government expects economic growth to slow to 0.5% this year from 1.5% in the previous year. This would be the weakest expansion since 2013 when the euro zone struggled amid a sovereign debt crisis.
Commenting on the July trade figures, ING economist Carsten Brzeski said: "This morning's trade data brings a very weak ray of sunshine. Nothing more but luckily also nothing less."
($1 = 0.9070 euros) (Writing by Paul Carrel; Editing by Michelle Martin and Hugh Lawson)