Reuters reported that Shanghai copper edged up supported by hopes of Chinese stimulus after a state backed paper called for plans to tackle economic risks while the US 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.

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 US economy although recent mixed data makes anticipating the Fed's next move difficult.

Mr Zhou Jie analyst of CIFCO Futures said that "Hopes of stimulus in the US and China have boosted Shanghai copper. But upward momentum is capped by low trading interest today with the LME closed.

He expected Shanghai copper to be stuck within a tight range of CNY 55,500 to CNY 56,500, the most active December copper contract on the Shanghai Futures Exchange edged up 0.2% to CNY 55,720 per tonne after falling 0.7% 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.

Shanghai based trader said that 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 concentrates costs, further squeezing their profit margins.