Loki was two things that would be very important in this battle; a trickster and trained as an Asgardian prince should be in combat. Even if he wasn't like the other warriors. When the claws grew out, multiples of Loki appeared, all with that dagger. Illusion magic and duplication casting, but it would help keep the rabbit off-guard from the real one.

Dodge right, block left, put himself at an angle to the rabbit and reaching out to grab its ears and pull its head back. A shift of the dagger, and then it was slicing the killer rabbit's throat. Magic? Evil? Rabid? It didn't matter so long as the beast died.