Sanjay Ingley insisted on continuing with the surgery despite the amount of blood, saying it was in the patient's best interests to carry on.
But 83-year-old Blodwen Jenkins died of hepatitis B 14 weeks after Mr Ingley carried out the hip replacement operation at Ysbyty Gwynedd hospital in Bangor in July last year.
Mr Ingley denied a charge of serious professional misconduct when he appeared in front of the GMC yesterday.
He took up the job as a registrar specialising in orthopaedics at the hospital last July despite knowing he was infected with hepatitis B.
He admitted cutting his finger during the operation but denied it was bleeding heavily as he carried on. He also denied taking inadequate precautions to protect patients and colleagues.
The hospital was aware that he carried the virus, which is transmitted through blood, but allowed him to carry on working because he was considered to be a low-risk carrier.
Staff Nurse Elaine Gregory, from Anglesey, who assisted in the operation on the elderly patient, told how Mr Ingley had cut one of the fingers on his left hand when he made the incision. "It was bleeding quite heavily," she said. "You could see the blood. I would say it was oozing. I vaguely remember swabs being used and another pair of gloves was put on the top of the ones he was wearing."
Mrs Gregory, who was not aware at the time that Mr Ingley had hepatitis B, said she was concerned about the amount of blood and also the fact that the surgeon said his finger was numb. But he insisted on carrying on, saying it was in the patient's best interests because the incision had been made.
Mrs Gregory added: "As the operation progressed, you could see [the blood] coming up the glove to the palm. That was how it appeared."
She said that after the operation one of the other nurses was concerned that an accident report form should have been filled in about the cut. The hospital said that none was filled in at the time.
Dr Lindon Miles, who worked in the hospital's occupational medicine department at the time, told the hearing that Mr Ingley had been issued with a certificate saying that he was fit for duty after tests showed he was a low-risk carrier and he satisfied the hospital authorities that he was fully aware of safe methods of working.
The hearing continues.