* French, Iran business ties on rise after nuclear deal
* French state bank targets export credit plan by end May
* Iran watching to see "if politics helps or hinders" trade (Adds details on export facilities from BPI chief executive)
By John Irish and Parisa Hafezi
PARIS, Feb 8 (Reuters) - France will encourage its firms to do business in Iran despite uncertainty over a landmark 2015 nuclear deal putting the business environment in "limbo", a senior French finance official said on Thursday.
Along with other European countries, France has been looking to increase trade with Iran since Paris, Washington and other world powers agreed to lift most economic sanctions in 2016 in exchange for limitations on Tehran's nuclear programme.
But U.S. President Donald Trump on Jan. 12 vowed to restore U.S. sanctions unless France, Britain and Germany change what he calls the "worst deal ever" to his liking, effectively putting it on life support until mid-May.
"We are encouraging companies to keep doing business in Iran," Joffrey Celestin-Urbain, director of bilateral relations at the finance ministry told a Euromoney Iran conference.
"We are in limbo on the international scene. Nobody knows what will happen after May. This is the uncertainty our French companies are facing and this is something you have to take for granted if you want to do business in Iran."
France, which has had close business ties with Iran since before the fall of the Shah in 1979 and operates large factories there including Renault and PSA plants, has sought to deepen trade ties since sanctions were lifted.
French exports to Iran for the first 11 months of 2017 rose 120 percent to 1.29 billion euros ($1.6 billion) and imports grew 80 percent to 2.16 billion euros, Celestin-Urbain said.
The short-term priority was to keep trade simple and complete a scheme this year to offer euro-denominated credits to Iranian buyers of French goods, he said, a move that would keep bilateral trade outside the reach of U.S. sanctions.
The head of state-owned investment bank Bpifrance, which is putting the plan together, said he was confident the scheme, which had a pipeline of deals worth 1.5 billion euros, could start operating by end-May or early-June. However, he warned that talks were ongoing on how to protect French firms if the U.S. snapped back sanctions.
"Everybody is waiting for the situation to be clarified," said Nicolas Dufourcq. "We are currently negotiating with the Iranian authorities. Everybody understands that it would be a force-majeure event and the loan would have to be reimbursed and if we find a solution it will have to be in French interests."
Tehran has been hoping for swift reintegration into global trade, but its failure to persuade Western banks to accept Iranian business has been the main roadblock to rehabilitation.
Reintegrating Iranian banks into the financial system would take time, and may require support from Tehran to help allay the extra costs to banks of added risk and additional checks.
"Unfortunately Iran's banking system has yet to see full benefits under the deal," Iranian central bank chief Valiollah Seif said in a statement, read by his advisor Ahmad Azizi.
"Iran is watching to see if politics helps or hinders business." ($1 = 0.8177 euros) (Reporting by John Irish; Editing by Catherine Evans and Alexander Smith)