(Bloomberg) -- Chinese liquor makers hit a bout of volatility, sharply dropping before erasing declines, amid speculation the country will ban civil servants from drinking alcohol, including when they’re off the clock.

Baijiu distillers Kweichow Moutai Co. and Wuliangye Yibin Co. rose about 0.3% on Tuesday after both recording a more than 4% drop on Monday. Tsingtao Brewery Co. added 1.3%, a slight rebound from a 7.4% plunge, while Budweiser Brewing Co APAC was unchanged following a 4.2% loss.

The bearish sentiment spilled over to European markets, with Pernod Ricard SA declining 3.4% on Monday. Remy Cointreau SA dropped 6.8%.

Shares tumbled as Chinese markets re-opened after a week-long holiday, with investors parsing a report on media portal NetEase that said people going into careers as civil servants should be aware the sector is facing more regulation. The report highlighted previous examples in which drinking during the work week was banned by local officials, though it didn’t mention any recent developments or a widening of the policy to cover workers across the country.

But with markets already spooked by bleak Chinese holiday-spending data and deepening concerns about the economy amid rising Covid cases, it was enough to spark a sell-off. The liquor sector is also prone to outsized moves as it’s previously been targeted in President Xi Jinping’s anti-corruption campaign that focused on officials’ lavish spending on entertaining.

Read more: Grim Reality Greets China Traders as Stocks Slide After Holiday

“The sentiment in the market is extremely fragile and investors are just so sensitive to any rumor,” said Daisy Li, fund manager at EFG Asset Management HK Ltd. The market can also be very momentum driven, she said.

China’s Central Organization Department didn’t immediately respond to Bloomberg News’ fax seeking comment on the speculation. A number of Chinese civil servants spoken to by Bloomberg News said they were not aware of a nationwide ban on drinking outside of work hours.

If a ban were to be implemented, then there’d be a risk it could be widened beyond just civil servants, Jefferies analysts wrote in a note on Monday.

The foray into regulating alcohol consumption has precedent. Local governments in Henan’s Puyang and Gansu’s Qingcheng have announced in recent years a ban on civil servants drinking during the working week -- even in their private time -- as well as rules for consumption on the weekends.

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