* Fed has room to deliver stimulus - Bernanke
* Low trading interest on LME holiday - analyst
* Jinchuan buys Chinese spot copper - sources
* Coming up: Chicago Fed Midwest manufacturing index; 1230 GMT
By Carrie Ho
SHANGHAI, Aug 27 (Reuters) - Shanghai copper edged up on Monday, supported by hopes of Chinese stimulus after a state-backed paper called for plans to tackle economic risks, while the U.S. Federal Reserve also raised expectations for further easing.
China should ready plans to respond to near-term risks in an economy facing significant downward pressure, but keep the broad policy focus on longer-term structural adjustments, the official People's Daily said in a front page editorial on Friday, suggesting that Beijing has not ruled out more imminent stimulus policies.
Stimulus hopes were also pinned on the United States after Fed Chairman Ben Bernanke told a Congressional panel in a letter that the central bank has room to deliver additional monetary stimulus to boost the U.S. economy, although recent mixed data makes anticipating the Fed's next move difficult.
"Hopes of stimulus in the U.S. and China have boosted Shanghai copper. But upward momentum is capped by low trading interest today with the LME closed," said CIFCO Futures analyst Zhou Jie, adding that he expected Shanghai copper to be stuck within a tight range of 55,500 - 56,500 yuan.
The most active December copper contract on the Shanghai Futures Exchange edged up 0.2 percent to 55,720 yuan ($8,800) per tonne, after falling 0.7 percent in the previous session.
In the physical copper market, there has been a pick-up in spot purchases in China with investors encouraged by news that the country's third-biggest smelter, Jinchuan Group, has plans to buy up to 150,000 tonnes of the metal through its trading unit by end of September.
The trend may push the arbitrage window open, making it profitable for Chinese buyers to import copper based on LME prices.
Traders have also reported more spot buying in China as investors expected large Chinese smelters to export more copper, based on a new tolling tax incentive.
"Many smelters have been buying domestic copper to fulfil their local contracts as the high prices of LME copper over Shanghai copper is pushing up their imported copper concentrates costs, further squeezing their profit margins," said one Shanghai-based trader.
In industry news, money managers, including hedge funds and other large speculators, cut their net short position in U.S. copper futures by 7,551 contracts to 3,224 contracts in the week ended Aug. 21.
In other news, Jiangxi Copper Co Ltd , the top producer of the metal in China, has set up a wholly owned subsidiary in Hong Kong to reduce financing costs for imports and potential acquisitions, company spokesman Pan Qifang said on Thursday.
Three-month copper on the London Metal Exchange ended lower at $7,640 per tonne on Friday. It is not trading on Monday as the LME is closed for a Bank Holiday in the UK.
Base metals prices at 0411 GMT
Metal Last Change Pct Move YTD pct chg
SHFE CU FUT DEC2 55720 100 +0.18 0.16
SHFE AL FUT DEC2 15360 20 +0.13 -3.03
HG COPPER SEP2 348.75 0.40 +0.11 1.50
SHFE ZN FUT DEC2 14770 110 +0.75 -0.17
SHFE PB FUT 15160 70 +0.46 -0.85
LME/Shanghai arb 1105
Shanghai and COMEX contracts show most active months
^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE
third month
Source: http://www.reuters.com/article/2012/08/27/markets-metals-idUSL3E8JR0QU20120827
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