LONDON, April 19 (Reuters) - Hedge funds globally have

turned the most bearish they've been on equities this year, a

Goldman Sachs ( GS ) note said, as sticky inflation and renewed

geopolitical concern have dragged stock markets lower.

They ditched long positions and added short ones across all

regions led by North America, Europe, and to a lesser extent

developing Asia, said the note sent to investors on Thursday and

seen by Reuters on Friday.

A short or bearish position bets that an asset will decline

in value, while a long position anticipates a price increase.

After ending each of the last three months with a net bought

position, hedge funds held a net sold position by mid-April "as

managers slowed the pace of long buying while ramping up short

selling activity (especially in macro products)," the note said.

The U.S. S&P 500 stock index is down roughly 4% so far in

April, Europe and China indices have fallen about 2%

each.

The amount of net leverage used by stock picking hedge funds

to borrow for trades declined 1.9% this month so far, suggesting

"a more guarded posture and reduced risk appetite by hedge

funds," the note added, citing data to April 16.

"We are seeing significant interest in market neutral and

long short equity managers due to investor concerns relative to

high U.S. equity valuations, stubbornly high inflation, and

geo-political risks," said Don Steinbrugge, founder and chief

executive of Agecroft Partners, a hedge fund consulting firm.

Consumer discretionary stocks, where companies produce

nice-to-haves such as luxury goods, appliances and automobiles,

drew the most shortsellers, the note said.

Hedge funds also continued to short energy companies even as

increased tensions in the Middle East have lifted energy prices

and generally boosted energy stocks.

Traders added long positions in consumer staples such as

food and beverage companies and also piled into health care

stocks, the Goldman note also showed.

Hedge funds kept buy positions in semiconductor and related

equipment stocks which remained at multi-year highs.

Allocations to software dropped to three-year lows as many

hedge funds have begun to short the sector, the Goldman note

added.