LONDON - Southern European government bond yields nudged off lows but remained sharply lower on Wednesday, while the euro trimmed gains after a European Central Bank statement on addressing the recent rout in bond markets.

The ECB will skew reinvestments of maturing debt to help more indebted members and will devise a new instrument to stop fragmentation, it said on Wednesday, seeking to temper a market rout that has fanned fears a new debt crisis.

Italy's 10-year bond yield was last down 25 basis points on the day at 3.97%, off session low at around 3.87%. It was down 30 bps on the day just before the ECB statement.

Spanish and Portuguese 10-year yields also came off the day's lows but were still sharply lower on the day. .

Germany's 10-year yield, the benchmark for the bloc, which had dropped over 10 basis points in earlier trade, also rose from the day's highs and was last down 8 bps 1.67%.

The euro meanwhile trimmed gains and was last up 0.1% on day at $1.0436. It was up 0.3% before the statement.

Euro zone shares were higher immediately after the ECB statement to hit a fresh session high but then turned lower and by 1217 GMT it was up 1.2%.

Italian bank stocks reduced gains and were last up 3.6%, having risen as much as 6.6% in morning trade. Euro zone banks also trimmed gains.

(Reporting by the London Markets Team; editing by Saikat Chatterjee)