SHARES in BT remained in negative territory, although up from initial falls of nearly four per cent, as the City and analysts reacted to Labour's proposals to nationalise Openreach.
The party has said it will take over the division and make broadband in the UK free to all.
There was general scepticism in the market, with several experts questioning the £20 billion price tag and whether the sector can be better run by the state.
But some recognised the political appeal the policy could have among voters.
Russ Mould, investment director at AJ Bell, said: "The threat of nationalisation, which has loomed over different parts of the market since Labour's policies have moved in that direction in recent years, now hangs over telecoms firm BT.
"The relatively muted share price response likely reflects investors' scepticism about the plan getting off the ground.
"Current polling suggests Labour is unlikely to win a majority in the looming election, however if the party was to enjoy a late surge in the polls, BT shareholders might start to get a little bit more nervous.
"There is also a risk that Labour's idea proves popular with voters and other parties feel compelled to move at least some way in this direction."
Matthew Lesh, head of research at the Adam Smith Institute, said: "The key issue in broadband is a lack of competition. The last thing we need is a costly government scheme that will scare away booming private sector investment.
"Just today TalkTalk put on hold the announcement of plans about FibreNation, a multibillion pound project to invest in fibre.
"Labour's plan will be turning back the clock to a time when Britons had to wait months for a phone line connection from the post office."
At investment bank Jefferies, analysts said: "In a nationalisation scenario, we understand that BT's most effective legal recourse might be to defend shareholder value, not attempt to block government policy.
"The UK has bilateral investment treaties with countries in which overseas BT shareholders are located, and these are intended to protect against asset expropriation.
"UK-based shareholders might expect to receive equal treatment."
Neil Wilson, chief market analyst at Markets.com said: "There are a lot of concerns about the implications of this policy on the rest of the business, the pension fund deficit, and of course pensions that own the stock.
"It means BT can now be added to the list of 'Labour Danger' stocks which includes utilities and Royal Mail. Of course all UK stocks are in the firing line because of plans to hand shares to workers."
