UPDATE 1-German Ifo business morale hits record, firms shrug off euro rise

* Ifo chief says businesses "euphoric"

* Ifo economist says firms unimpeded by euro strength

* Morale rises in manufacturing, construction, wholesaling

* Falls in retail sector (Adds economist, details, context)

BERLIN, July 25 (Reuters) - German business confidence unexpectedly rose in July, a survey showed on Tuesday, hitting a third record high in as many months as Europe's largest economy shrugged off a strong euro and morale lifted across industry.

The Munich-based Ifo economic institute said its business climate index, based on a monthly survey of some 7,000 firms, rose to 116.0 from 115.2 in June. That beat a Reuters consensus forecast of 114.9.

The rise will make welcome reading for Chancellor Angela Merkel, who is seeking a fourth term in office at a national election on Sept. 24. With the economy in rude health, her conservatives are promising full employment by 2025.

"Sentiment among German businesses is euphoric," Ifo chief Clemens Fuest said in a statement.

"Companies' satisfaction with their current business situation reached its highest level since Germany's reunification. Their short-term business outlook also improved. Germany's economy is powering ahead," he added.

Ifo economist Klaus Wohlrabe said German business was experienced in managing the impact of exchange rate moves and was not impeded by gains in the euro, which hit an almost two-year high against an ailing dollar on Monday.

"Hardly anything seems to be able to hit the German economy," Wohlrabe told Reuters.

Underlining the economy's health, German chemicals and pharmaceutical companies association VCI said on Thursday it expected business to continue to do well in the second half of 2017, raising its full-year revenue forecast to 5 percent.

Last week, Germany's ZEW institute said the economic outlook remained positive, despite a fall in investor morale for the second consecutive month in July which economists attributed to the stronger euro.

The Economy Ministry said earlier this month the economy would enjoy solid growth in the second quarter, driven by soaring private consumption and higher construction activity while net foreign trade was unlikely to add to the expansion.

Analysts expect Germany's gross domestic product (GDP) to have grown by at least 0.6 in the April-June period. The Federal Statistics Office will publish preliminary data for the period in mid-August.

The International Monetary Fund expects the German economy to grow by 1.8 percent in 2017 and 1.6 percent in 2018. (Writing by Paul Carrel; Editing by Michelle Martin and John Stonestreet)