HONG KONG (AFP) - British banker Rurik Jutting, who is accused of murdering two Indonesian women in his upscale Hong Kong apartment, was a cocaine addict who had developed drug-induced fantasies, a court heard on Wednesday (Oct 26).

The 31-year-old Cambridge graduate and former securities trader for Bank of America-Merrill Lynch has pleaded "not guilty" to two murder charges on the grounds of diminished responsibility.

He pleaded guilty to manslaughter, which was rejected by the prosecution.

Since the trial started on Monday (Oct 24), jurors have viewed harrowing iPhone footage of Jutting torturing his first victim, Ms Sumarti Ningsih, 23, for three days before he killed her by cutting her neck with a serrated knife at his apartment two years ago.

Days later, he killed Ms Seneng Mujiasih, 26, cutting her throat.

Ms Mujiasih's body was found in a pool of blood in Jutting's living room on Nov 1, 2014, while Ms Ningsih's decaying body was discovered stuffed into a suitcase on his balcony.

In court on Wednesday, prosecutor John Reading said Jutting had become increasingly withdrawn and "deeply addicted to cocaine".

Footage from police interviews showed Jutting saying he had started to take more cocaine at weekends for six weeks before the killings.

"I've had cocaine previously, but not in such a large amount," he told police.

"When I started taking it, it started bringing out long and extended fantasies," he said.

Speaking calmly, he told police that he had killed the two women.

"These are the only two people who have been killed by me," he told the two interviewing officers.

Jutting told police that he had met Ningsih on the website Craigslist under the "casual encounters" section, storing her name in his phone as "Indo".

He also said that he had begun to spend time at a hotel near his apartment for three weeks before the killings, and had paid for sex workers to go to his room during those stays.

The jury was shown 20 photos recovered from Jutting's phone, including pictures of Ms Ningsih bound and gagged, and of her body in the shower.

Forensic pathologist Poon Wai-ming told the court Ms Ningsih had been found in a suitcase in the foetal position, her neck severed.

Ambulance officer To Shing-fai described Jutting as talking to himself and crying in the hallway outside his apartment on the night the bodies were discovered.

Jutting faces a life sentence if convicted of the murders.

The killings shone a spotlight on the seedy underbelly of the finance hub. Jutting's flat lay streets away from one of the city's red light districts.

Indonesian migrant organisations in Hong Kong have called for justice for the women, and compensation for their families.