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The transmission characteristics of a novel amplifying Sagnac loop incorporating an erbium doped fibre amplifier and a semiconductor laser amplifier are reported. The transmission characteristics of such loops at low input powers (<25 mu W in this device) have a nonlinear (approximately cubic) form which has been characterised experimentally and used for all-optical pulse shaping and pulse compression. Optical pulses have been compressed down to 150 ps with a typical single pass compression factor of 0.7.<<ETX>>