By Ozge Ozbilgin

ANKARA (Reuters) - Turkey banned alcohol advertising and tightened restrictions on its sale on Friday, drawing criticism from secular Turks as well as the country's brewing industry.

The new law includes a ban on shops selling alcohol from 10pm to 6am, with fines of up to 500,000 lira ($270,000) for owners and operators of venues that violate the law, and a possible one-year jail sentence for selling to minors.

Turkey is an overwhelmingly Muslim nation with a secular constitution, but Prime Minister Tayyip Erdogan's ruling AK party has come under fire from some quarters for undermining the separation of state and religion in the country.

Since coming to power in 2002, the government has taken various measures against alcohol, the consumption of which is forbidden by Islam. Tax on alcohol has soared and flag carrier Turkish Airlines has stopped serving alcohol on some domestic flights.

"Religion-linked restrictions are contrary to secularism," political commentator Nazli Ilicak wrote on Twitter. "I am not defending alcohol but freedom.

"Not even beer will be sold after 10pm. We can't consider this normal ... I see it as an excessive intervention and an ideological stance."

The government, meanwhile, says it is trying to bring Turkey up to European norms by controlling alcohol sales and protecting the younger generation as it negotiates to enter the EU.

"There are such regulations everywhere in the world. The youth of a nation should be protected from bad habits," Erdogan said in a meeting with party members.

The bill passed by parliament, which needs presidential approval before coming into effect, bans alcohol producers from sponsoring events and venues where alcohol is sold and consumed. It also prohibits the public display of alcoholic drinks and requires health warnings on packaging.

"We don't want a generation wandering around in a merry state day and night," said Erdogan, who declared in April that yoghurt beverage ayran was Turkey's national drink, rather than beer or the aniseed spirit raki favored by many Turks.

INDUSTRY BLOW

The law changes would be another blow to local brewers that are already grappling with alcohol taxes of more than 100 percent - among the world's highest.

The law requires a distance of at least 100 meters between premises selling alcohol and places of worship or education, though it excludes tourist premises.

"I think this will have a serious negative impact on the sector. It will hit the tourism sector in particular but affect the country's whole economy," said Akin Ongor, owner of the Turkish boutique winemaker Selendi.

The opposition CHP party's deputy leader, Faiz Öztrak, was no less critical, saying that the government's measures would have a wide impact.

"Government always changes the game rules unilaterally. After all these, how can you invite foreign investors to Turkey? You don't establish confidence," he told a press conference on Friday.

Shares in Turkish brewer Anadolu Efes were down by more than 6 percent and Turk Tuborg by nearly 2 percent in early afternoon trading.

The world's biggest spirits group Diageo, which bought Turkey's Mey Icki for $2.1 billion in 2011, said in a statement that it was "very saddened" by the passage of the legislation and that a better result could have been achieved if the sector had been consulted. ($1 = 1.8464 Turkish liras)

(Writing by Daren Butler; Editing by Parisa Hafezi and David Goodman)