SHANGHAI (Reuters) - Shanghai copper edged u

SHANGHAI (Reuters) - Shanghai copper edged up on Monday, supported by hopes for stimulus measures from China 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 0.4 percent to 55,840 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 the 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 fulfill their local contracts as the high prices of LME copper over Shanghai copper is pushing up their imported copper concentrate 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 August 21.

Jiangxi Copper Co Ltd ( 600362.SS )( 0358.HK ), the top producer of the metal in China, has also 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.