May 22 (Bloomberg) -- Hedge funds worldwide rose in April as global stock markets recovered amid easing concerns that the global credit crisis will slow economic growth, according to Eurekahedge.

The Eurekahedge Hedge Fund Index, which tracks the performance of 2,230 funds that invest globally, rose 1.4 percent, based on preliminary figures from the Singapore-based hedge-fund research and publishing company. The index, which is down 1 percent this year, dropped 2.2 percent in March.

The MSCI World Index jumped 5 percent last month, completing the best month since November 2004, as confidence returned following the U.S. subprime loan crisis.

``Rallying equity markets, on the back of a sharp increase in risk appetites, coupled with market reversals across some other asset classes, such as bonds and currencies, were factors responsible for the month's gain,'' Eurekahedge said in a statement posted on its Web site.

The U.S. Federal Reserve indicated on April 30 it will pause after seven consecutive interest-rate cuts, betting that low borrowing costs and a federal tax rebate will revive growth in the world's largest economy.

``The Fed's aggressive response to the weakness across credit markets and the slowing of economic growth in the U.S. went some way in improving investor sentiment during April,'' Eurekahedge said.

Japan Rises

In terms of regional mandates, Japanese managers were the best performers in April, with the Eurekahedge Japan Hedge Fund Index advancing 3.5 percent, according to Eurekahedge. Those investing in Asia saw similar gains with the Asia Ex-Japan index climbing 2.8 percent, the report showed.

Elsewhere in the world, the Eurekahedge North American Hedge Fund Index added 1.5 percent, while the index tracking European hedge funds rose 1.4 percent.

Managers of funds using so-called long-short equity strategies were the best performers because of gains in global stock markets, the report said.

Hedge funds are mostly private pools of capital whose managers participate substantially in profits from their bets on whether the prices of assets will rise or fall.

To contact the reporter on this story: Tomoko Yamazaki in Tokyo at tyamazaki@bloomberg.net

Last Updated: May 22, 2008 00:28 EDT