LONDON, April 22 (Reuters) - Global hedge fund borrowing

rose to a five-year high in the week to April 19, a Goldman

Sachs ( GS ) note showed, as hedge funds ramped up trading to

take advantage of the first sharp dip in U.S. and European

stocks this year.

Banks give hedge funds leverage, essentially a loan to fund

investing, which amplifies hedge fund returns but can also

increase losses.

Gross leverage, or total borrowing, reached 270% after

rising 2.6 points from the prior week, Goldman said in a note

released Friday and seen by Reuters on Monday.

Hedge funds' overall net leverage, which measures a fund's

total assets including borrowing against what it actually owns,

ticked up 0.5 points to 73% last week, said Goldman Sachs ( GS ).

Stock picking hedge funds not using algorithms to trade were

the type of hedge fund that ratcheted up leverage levels, the

note added. It did not give a number for systematic hedge fund

leverage.

Leverage can be used to take bets against stocks but also to

fund the derivatives trades that bet their values will rise. A

short trade bets that an asset will fall in value.

Hedge funds U-turned stock bets on Wednesday and Thursday

last week after three straight weeks of selling and bought the

dip in global equities particularly in the U.S. and Europe, said

the bank.

The S&P 500 last week fell more than 5% from its

March 28 closing high, its biggest retreat since October, while

the broadest European index of stocks fell 1.2% in its biggest

weekly decline since mid-January.

Though rare, sharp dips and recoveries are not uncommon: the

S&P 500 has experienced an average of three pullbacks of 5% or

more every year since 1929, a Bank of America ( BAC ) analysis showed.

Hedge funds focused bullish trades on technology companies,

which had the highest level of net buying in two months. But

traders remained short consumer discretionary stocks, such as

luxury and travel, the Goldman note said.

Hedge funds bought stocks in most sectors including

healthcare, tech, real estate and industrials, it added.

Single stocks saw the largest notional long buying in over a

year, while macro products were net sold for the third straight

week led by short sales, Goldman said.

North America and Europe were net bought on the week, while

Asia was net sold.