Oracle chief executive Larry Ellison

The software giant enjoyed its first increase in sales for two years despite widespread economic gloom and the threat of war in Iraq.

The figures, which beat analysts' forecasts, will offer a glimmer of hope to the battered technology sector that recovery might be on the way.

For the three-months to the end of February, Oracle's profits rose to $571m (�359.7m) or 11 cents a share from $508m or 9 cents a share.

'Significant milestone'

Sales were up 2% to $2.31bn from $2.25bn in the same quarter a year earlier.

Oracle continues to have trouble persuading businesses to buy new software licences.

But the results ended seven consecutive quarters of year-on-year declines in revenue.

Industry analyst Drew Brosseau, of SG Cowen Securities, said: "It's a significant milestone that shows some growth may be returning."

Iraq 'wild card'

But uncertainties over the looming war in Iraq affected sales in February, Oracle said.

Jeff Henley, the chief financial officer, said: "You could just feel the anxiety rising,"

Mr Henley said the "wild card" of war in Iraq made it hard to predict whether Oracle will be able to build upon the momentum of its most recent quarter.

"There is a dark cloud sort of hanging over everything," said Mr Henley.

"If the uncertainty of this war goes away, I think it definitely would be helpful to economic growth."