China's commerce ministry said in a statement it had found that European distillers had been selling brandy in its 1.4 billion-strong consumer market at a margin in the range of 30.6% to 39% and that its domestic industry had been damaged.

"Provisional anti-dumping measures will not be taken in this case for the time being," the statement said, leaving open the possibility Beijing may act at some time in the future.

Previously, the ministry had said the probe was expected to end before Jan. 5, 2025, but that it could be extended "under special circumstances".

China has been canvassing the bloc's 27 member states to reject the European Commission's proposal to adopt additional duties of up to 36.3% on Chinese-made electric vehicles in an October vote, and the decision not to impose tariffs on brandy could be seen as helpful to its case.

"This looks like a negotiation tactic from China," Barclays analyst Laurence Whyatt said, expecting to see a link between EU tariffs on Chinese EVs and Chinese action on EU brandy imports.

"Can they persuade the EU to roll back some of the measures that have been imposed?"

The European Commission said in a statement that it had noted Beijing's announcement and was following the investigation "very closely."

The EU executive also said its detailed assessment showed the merits of the investigation were "questionable."

"The Commission will therefore follow the investigation carefully to ensure WTO rules are being followed ... and will not hesitate to take all necessary actions to defend EU exporters," the statement said.

FRENCH TARGET

France was seen as the target of Beijing's brandy probe due to its support of tariffs on China-made EVs. It also accounted for 99% of China's brandy imports last year.

French exports to China of dairy products that Beijing is investigating totalled 179 million euros ($198 million) last year, about 35% of the EU's total, according to Eurostat.

French cognac association Bureau National Interprofessionnel du Cognac said China's provisional decision did not put its concerns about eventual tariffs to rest.

"We understand that the duties that could be applied to our products at the end of the procedure would average 34.8%. If imposed, such duties would heavily impact Cognac exports to China, a market that alone accounts for 25% of our exports," the association said in a statement.

"An entire sector would thus become the collateral victim of a conflict beyond its control ... We expect France and the European Union to immediately negotiate for the non-application and abandonment of these duties," the statement added.

Shares in French spirit makers jumped about 8% after the announcement, though later pared gains as the market digested the full statement.

At 1058 GMT, Pernod Ricard (PERP.PA) traded 4.2% higher, Remy Cointreau (RCOP.PA) was up 5.95% and Italy's Campari was 1.53% higher after its shares were earlier automatically halted in Milan when the stock rose 4.5%.

China's decision came as Pernod Ricard executives presented the company's annual results to investors.

Chief Executive Officer Alexandre Ricard said the company would remain prudent on China given the tariff decision appeared to only apply "for now," but did not elaborate further.

Spokespeople for Pernod and Remy Cointreau (RCOP.PA) did not immediately provide comments.

Beijing announced its anti-dumping probe on EU brandy in January. Cognac makers have maintained from the outset that the probe is linked to a broader trade row rather than the liquor market.

As well as the brandy probe, Beijing has opened anti-subsidy investigations into dairy and pork products from the EU in recent months.

The dairy probe was launched last week, the day after Brussels published its revised tariff plan for Chinese-made EVs. France is also a major exporter of dairy to China and last year sent there $211 million worth of the targeted products, mostly milk and cream.

($1 = 0.9012 euros)

($1 = 0.9011 euros)

(This story has been corrected to fix the EU dairy export data in paragraph 12)