* LME copper up for 4th session, hovers at four-month high * Shanghai copper weighed down by still-sluggish fundamentals * ShFE Oct copper jumps over 5 pct after going limit-up on Tuesday * Investors eye Federal Reserve meeting for QE3 * Coming up: Germany's court decision on euro zone rescue fund 0800 GMT By Carrie Ho SHANGHAI, Sept 12 (Reuters) - London copper edged higher on Wednesday, on track to post a fourth session of gains on hopes that the U.S. Federal Reserve might announce another round of quantitative easing this week and on bets that a German court ruling on the euro zone's rescue fund will be passed. But gains may be capped by fears that prices have risen too high, considering that downstream demand for copper in top consumer China remains sluggish. Three-month copper on the London Metal Exchange had edged up just $1 to $8,091 per tonne by 0711 GMT, after rising 0.3 percent on Tuesday. But the most active December copper contract on the Shanghai Futures Exchange edged down 0.1 percent to 58,290 yuan ($9,200) per tonne. "Despite recent optimism over stimulus programmes by major economies, investors are getting a little panicky at these high copper prices. Copper demand by downstream industries in China is still weak, after all," said CIFCO Futures analyst Zhou Jie. LME copper prices have already risen 6.4 percent this month, chalking most of the gains on Sept. 7 after China, the world's top copper consumer, approved about $150 billion-worth of infrastructure projects. Profit-taking by large investors during the session may have weighed on copper prices, traders said, adding that these investors were also responsible for the large volatility in the ShFE October copper contract over the past few days. "Today's price fall in copper seems like the result of cross-contract arbitrage trading by a few large investors. They were probably the ones who pushed the ShFE October copper contract to its daily limit up yesterday," said a Shanghai-based trader. "Prices of the ShFE December and LME copper contracts probably fell after they exited their positions there." ShFE October copper closed the session more than 5 percent higher. The contract ended down 4.3 percent on Tuesday after trading was briefly halted when prices were limit-up. In Europe, legal experts polled by Reuters unanimously expected Germany's top court to approve the euro zone's new bailout fund and budget rules next week, but they also said the court would impose tough conditions limiting Berlin's flexibility on future rescues. With the Fed starting a two-day policy meeting later in the session, some investors are hopeful that the U.S. central bank will launch more easing policies this week, although others are less optimistic. Overall risk appetite was also supported by comments from China Premier Wen Jiabao, who said China was on track to meet this year's target for economic growth and, if needed, the government could utilise a 100 billion yuan fiscal stability fund to boost growth. WINNING STREAK LME aluminium edged up 0.2 percent and is on track to post a ninth session of gains, buoyed by recent news of producers outside China cutting production, analysts said. The contract has jumped 14 percent since hitting the year's low of $1,827.25 per tonne on Aug. 16. "Like other base metals, LME aluminium has risen on hopes of more stimulus programmes by the U.S. and the euro zone, and on China's infrastructure spending plans," said Shanghai Metal Markets analyst Zhang Chenguang. "On top of these, the contract also benefited from recent announcements of production cuts in markets outside of China - especially by RUSAL." Russian group United Company RUSAL Plc, the world's largest aluminium producer, said it would cut capacity 3 percent by the year-end and was taking a charge on its investment in Africa, as it grapples with weak prices and rising power costs. Base metals prices at 0711 GMT Metal Last Change Pct Move YTD pct chg LME Cu 8091.00 1.00 +0.01 6.46 SHFE CU FUT DEC2 58290 -70 -0.12 4.78 LME Alum 2083.75 3.75 +0.18 3.16 SHFE AL FUT DEC2 15795 25 +0.16 -0.28 HG COPPER SEP2 369.45 -0.25 +6.70 7.52 LME Zinc 2014.50 -2.50 -0.12 9.19 SHFE ZN FUT DEC2 15500 115 +0.75 4.77 LME Nickel 16837.00 12.00 +0.07 -10.01 LME Lead 2135.75 7.25 +0.34 4.95 SHFE PB FUT 15910 50 +0.32 4.05 LME Tin 20850.00 170.00 +0.82 8.59 LME/Shanghai arb 1570 Shanghai and COMEX contracts show most active months ^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE third month

Source