Germany's bid for closer scrutiny of hedge funds failed to win support from other major industrialized nations on Thursday.

"Given the strong growth of the hedge fund industry and the increasing complexity of the instruments they trade, we reaffirm the need to be vigilant," leaders from the Group of Eight (G8) industrialized countries said in a statement.

But the leaders did not mention any code of conduct to be imposed on the hedge fund industry, a key demand by Germany, which holds the G8 presidency.

Concerned about the potential threat posed by the expanding hedge funds to financial stability, Germany has been pushing hard for stricter oversight of the industry, which now manages around 1.5 trillion U.S. dollars worldwide.

However, Germany's move was opposed by both the United States and Britain, where most of the hedge funds are located.

The final agreement reached at the G8 summit stopped at voluntary discipline of the industry and indirect regulation.

"The global hedge fund industry should review and enhance existing sound practices benchmarks for hedge fund managers ... Supervisors should act so that core intermediaries continue to strengthen their counterparty risks management practices," the statement said.

The decision was similar to the position taken by the G8 financial ministers last month. In preparation for the annual summit, the financial chiefs agreed that there was a need to be vigilant about hedge funds.

The three-day summit of G8, which comprises the United States, Germany, Britain, France, Italy, Canada, Japan and Russia, kicked off on Wednesday in Germany's Baltic sea resort of Heiligendamm.

Source: Xinhua