Relief swept over battered euro zone bond markets on Wednesday as the European Central Bank said it would skew reinvestments of maturing debt to help more indebted members and will devise a new instrument to stop excessive widening of yield spreads.

Just this month alone, Italian 10-year bond yields have soared almost 100 basis points (bps). Spanish, Portuguese and Greek bond yields have jumped around 80 bps each, hurt by expectations for a series of rate hikes and the absence of a concrete plan from policymakers to limit rising borrowing costs.

For now, signs of an ECB plan taking shape bolstered bond markets which had already rallied on news that a rare, unscheduled meeting would take place on Wednesday.

"Flexible PEPP reinvestments now, and tasking the relevant committees to design a new anti-fragmentation tool, that's what markets needed to hear, finally!," Frederik Ducrozet, head of macroeconomic research at Pictet Wealth Management, tweeted.

Italy's 10-year bond yield fell as much as 47 basis points.

"The ECB has really heavy firepower. I don't think those who covered their shorts today want to go short again because they would hurt themselves," said Carlo Franchini, head of institutional clients at Banca Ifigest in Milan.

"It's an unprecedented breath of fresh air for the BTP. It's not a whatever it takes moment but were are close," he added.

Euro zone shares rallied and were last up 1.8 percent. (Reuters)