Hammer lent to accused gran killer: court

A man accused of brutally bludgeoning a grandmother to death borrowed a hammer later found dumped off a Queensland island, a court has heard.

Steven Mark John Fennell, 56, has pleaded not guilty to the murder of Liselotte Watson on Macleay Island, in Moreton Bay, in November 2012.

Robert Matheson knew him, and used to live near the Macleay Island cul-de-sac where the elderly woman resided.

He told the Supreme Court on Thursday he had lent the junk-mail delivery man a hammer about a year before the 85-year-old was found dead and never got it back.

But he said that one night in January 2013 he was watching a television news bulletin when a picture of the tool popped up on the screen having been located in waters off the island.

"(I said) that's my hammer!" Mr Matheson recalled, claiming he'd recognised it immediately.

"I lent it to him and he was supposed to return it (but) he said that he lost it."

The court has previously heard Mrs Watson's fatal injuries - including a row of deep indentations along the base of her skull - were likely to have been caused by repeated blows with an object consistent with a hammer.

The crown has alleged Fennell, who was authorised by the widow to make cash withdrawals from the bank on her behalf, murdered Mrs Watson in an attempt to cover up financial misdeeds.

However, prosecutor Glen Cash noted in his opening the case was circumstantial.

The trial before Justice Martin Daubney continues.