Enchanted Sword (item)

Enchanted Sword is a melee weapon found by breaking a background item (appears as the hilt of a sword protruding from rock) found at the cavern level. When used it will both perform a sword swing and fire a projectile at the current cursor location. Both the sword swing and the projectile do damage and generate light, making this a useful weapon for exploration. The Beam sword seems to be a stronger version of this weapon.

Trivia
The sword may be a reference to The Legend of Zelda, as in the first game, the main character could also shoot beams with a sword.