Is the U.S.’s chief ally on hedge fund regulation wavering? Ed Balls, a minister the British Treasury, said yesterday he would consult other European countries about pooling information regarding hedge funds in an effort to protect London’s financial establishment.

Of course, under such a scenario, the U.K. would do most of the sharing: London is home to 90% of Europe’s hedge fund business. But he did indicate that the U.K. and Chancellor of the Exchequer Gordon Brown are taking a softer line towards Germany’s push for greater transparency and supervision of hedge funds than are their American colleagues.

“Following discussion with the FSA, we believe that the quality of prudential supervision of hedge fund activity would be enhanced if there were greater co-operation between the key regulators,” Balls said at a conference sponsored by the chief U.K. regulator, the Financial Services Administration. “One option would be to broaden the six-monthly enquiries that the FSA currently carries out to other major regulators.”

Balls did warn that he and his boss continue to oppose any heavy-handed regulation of hedge funds.