Hedge funds are among the investors that have prospered this year by hitching a ride on soaring European stock markets. But as tension between Greece and its creditors mounts, funds are preparing for short-term volatility while broadly agreeing that the longer-term outlook for Europe remains robust.

Industry insiders say some hedge funds recently have been cutting back the bullish bets they have held for most of this year, while a small number have gone a step further by betting that equities are about to fall.