We demonstrate theoretically and experimentally that efficient signal shaping operation can be obtained at moderate power by using the transmission characteristic of a power-symmetric nonlinear optical loop mirror (NOLM) including highly twisted fibre and operating through nonlinear polarisation rotation, when the circular polarisation state orthogonal to the input polarisation is selected at the NOLM output. By adjusting the angle of the quarter-wave retarder inserted in the loop, the phase bias of the transfer characteristic can be adjusted precisely to enable proper signal shaping for moderate values of input power, remaining well below switching power. The tolerance of the procedure to deviations of the input polarisation from the ideal circular case is investigated numerically. We demonstrate experimentally the capabilities of this setup for both power equalisation and extinction ratio enhancement. Finally, we show that this setup is also useful to shape ultrashort optical pulses from the relaxation oscillations of a DFB semiconductor laser. In comparison with other NOLM-based techniques, the proposed approach allows to reduce by a factor of 8–10 the peak power required for pulse shaping, for the same fibre length and Kerr coefficient.