LONDON (Reuters) -Hedge funds sold European stock during March and April in the largest amount in 10 years, said a report by Goldman Sachs ( GS ).

Investors in European equities have been spooked by a "double whammy" in Europe: Trump's proposed tariffs coupled with the strength of the euro which would hamper the bloc's export-reliant economy.

Companies in the STOXX 600 index derive 60% of their revenues from abroad, of which the U.S. accounts for nearly half, Reuters reported.

In the past two months, hedge funds fled long bets that had expected stocks to rise. They also added short trades expecting assets in Europe to fall, said the Goldman note published Friday and seen by Reuters on Wednesday.

Traders were net sellers of European stocks for two thirds of the days in March and April.

Hedge funds sold single stocks focusing in on tariff-sensitive names, particularly in the auto and luxury goods industries. Speculators accelerated selling on luxury goods after underwhelming earnings, said Goldman.

Hedge funds also held defensive trades that would make money if European indices fell. They closed these hedges, following the 90-day tariff pause announced by Trump.

These hedges, particularly at the start of April, caused the hedge fund industry to hold the largest amount of short positions since 2019.

U.S. President Donald Trump on April 9 abruptly paused part of his tariff program for 90 days to allow room to negotiate lower trade barriers.

Speculators softened bearish positions on European pharmaceutical company stocks mid-month but increased them towards the end of April, data from Goldman Sachs ( GS ) showed.

Hedge funds increased all trading including short and long positions in company stocks related to Europe's defense industry, said the bank.

Hedge funds ended April with four times as many long positions in defense stocks compared with the traders who were short, the note said.

Hedge funds remained net long only in German companies, whereas in all other European country firms they were net short, said Goldman.

German steel makers are expected to benefit from boosts in defense spending in Germany and more broadly in Europe.

(Reporting by Nell Mackenzie;Editing by Ros Russell)