* German economy contracts in Q4 but 2013 looks stronger * Bernanke calls for higher U.S. debt ceiling to avoid default * U.S. crude, gasoline stocks seen rising on higher imports -poll * Coming Up: U.S. inflation, retail sales at 1330 GMT (Updates throughout, changes dateline, previous SINGAPORE) By Ron Bousso LONDON, Jan 15 (Reuters) - Brent crude oil rose above $112 per barrel on Tuesday on optimism that the euro zone economy may finally be stabilising and that the United States may reach a deal to sort out its budget and debt crisis. The German economy contracted by a larger-than-expected 0.5 percent in the final quarter of 2012, data showed on Tuesday, but most economists expect it to recover in the months ahead, supporting the euro zone. Federal Reserve Chairman Ben Bernanke urged U.S. lawmakers on Monday to lift the country's borrowing limit to avoid a potentially disastrous debt default, warning that the economy was still at risk from political gridlock over the deficit. Brent futures for February were up 45 cents to $112.33 per barrel by 1028 GMT. The contract, which expires on Wednesday, settled $1.24 higher in the previous session. U.S. oil rose 15 cents to $94.29. "Optimism among investors is at a record high and the general market sentiment is positive so there is no reason for them to withdraw," said Carsten Fritsch, senior oil analyst at Commerzbank in Frankfurt. "There is no real risk of a sharp sell-off at this point." The United States bumped into its borrowing limit on Dec. 31, and is now employing special measures to enable the government to meet its financial obligations. U.S. lawmakers now need to thrash out a deal over the country's debt and settle the budget to avoid drastic automatic spending cuts that have been postponed until March 1. Prices came under some pressure from expectations of a rise in U.S. oil inventories on higher imports, a Reuters poll of analysts showed. The poll of six analysts forecast crude stocks would show a rise of 2 million barrels for the week ended Jan. 11. Gasoline stockpiles were expected to have risen 3.1 million barrels for the week of Jan. 11, from 233.1 million barrels the week before. Continued soft demand, steady production and a small rebound in imports were the reason for the climb in gasoline stocks, said Jim Ritterbusch, president of Illinois-based Ritterbusch & Associates. Worries about supply disruption from the Middle East have been giving oil prices a floor. Iran could produce enough weapon-grade uranium for one or more nuclear bombs by mid-2014, and the United States and its allies should intensify sanctions on Tehran before that point is reached, according to a report by a group of U.S. non-proliferation experts. The West has applied the toughest sanctions ever in an attempt to force Tehran to end its controversial nuclear programme. Iran, which says it needs the technology to generate electricity, has threatened to block the Strait of Hormuz if it is attacked. Oil will get support from a weakening dollar. The dollar languished at 11-month lows against the euro after Bernanke's comments on the political gridlock. A weaker dollar makes dollar-priced commodities more attractive for buyers holding other currencies. (Additional reporting by Manash Goswami in Singapore; writing by Christopher Johnson; editing by William Hardy)

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