NEW YORK/LONDON (Reuters):

Goldman Sachs yesterday denied market talk that it was liquidating its Global Alpha hedge fund, amid a report that the fund had fallen 12 per cent in two weeks.

Earlier, several traders said there was persistent market talk that the fund was being wound down, and that it was selling large amounts of stock in German car parts supplier Continental, aerospace company EADS and Italian carmaker Fiat Bloomberg reported that the Alpha fund had fallen 12 per cent in the two week period ended August 3, and was down 16 per cent for the year.

The Alpha fund aims to generate returns that are not correlated to the Standard & Poor's 500 index. But the risk the fund takes on, as measured by the volatility of its returns, is supposed to be similar to the S&P 500, a fund investor said.

The fund invests mainly in liquid assets, and should be able to sell assets to meet investor redemption demands, the investor said.

A Goldman spokesperson in London declined to comment on the fund's position in those individual stocks. Goldman spokesman Peter Rose in New York declined to answer any questions about the fund, citing United States regulations surrounding hedge funds.