World shares stalled near 18-month highs and safe-haven Treasuries traded higher on Tuesday after U.S. Federal Reserve Chairman Ben Bernanke warned the economic recovery was at risk from the battle to raise the nation's borrowing limit.

Data showing the German economy contracted by a larger-than-expected 0.5 percent in the final quarter of 2012, as the euro zone crisis weighed on exports and corporate investment, also weighed on sentiment on Tuesday morning.

Federal Reserve Chairman Ben Bernanke on Monday urged U.S. lawmakers 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.

In a wide-ranging question and answer session, Bernanke painted a cautiously optimistic outlook for U.S. growth but gave no clear hints as to when the Fed would curb its aggressive bond purchases, despite speculation that it will halt them this year.

President Barack Obama on Monday rejected any negotiations with Republicans over raising the U.S. borrowing limit, accusing his opponents of trying to extract a ransom for not ruining the economy in the latest fiscal fight.

The United States expects to run out of tools to avoid a default between mid-February and early March, potentially causing lasting damage to the U.S. economy and its creditworthiness, the Treasury said on Monday.

U.S. banking regulators on Monday ordered JPMorgan Chase & Co (JPM.N) to tighten its risk controls after the bank lost billions of dollars due to bad bets from a trader known as the "London Whale".

U.S. cable group Liberty Global (LBTYA.O) raised its stake in Belgian group Telenet (TNET.BR) to 58 percent from 50.2 percent. Liberty is seeking to strengthen its grip on Telenet, which is benefiting from expansion across a range of telecom services. Liberty has been the controlling shareholder in the company since 2007.

RadioShack Corp (RSH.N) said on Monday it ended a mobile phone partnership with Target Corp (TGT.N) as the retailers could not agree on a new deal that would be profitable for both companies.

The S&P 500 and Nasdaq ended lower on Monday as worries over demand for Apple products drove down its shares and investors braced for earnings disappointments.

The Dow Jones industrial average .DJI was up 18.89 points, or 0.14 percent, at 13,507.32. The Standard & Poor's 500 Index .SPX was down 1.37 points, or 0.09 percent, at 1,470.68. The Nasdaq Composite Index .IXIC was down 8.13 points, or 0.26 percent, at 3,117.50.

(Reporting by Blaise Robinson; Editing by Catherine Evans)

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