Renewed shall be blade that was broken,
Refers to the sword known as Narsil. Narsil was destroyed (broken in two pieces; in the Peter Jackson film, multiple pieces) in the killing of Sauron at the beginning of The Fellowship of the Ring.
Elrond, fulfilling the prophecy, reforges Narsil as Andúril (“flame of the west”)
Tolkien may have been inspired in his creation of Narsil/Andúril by Gram of Northern mythology, which originally belonged to Sigmund, was shattered in battle, and was reforged for the use of his son Sigurd after his death.
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