Sarah Jayne Harper disappeared after leaving her home in Brunswick Place, Morley, to buy a loaf of bread from a corner shop.
The girl's body was discovered more than three weeks later in the River Trent in Nottinghamshire.
Robert Black, 46, is on trial in Newcastle for the murder of Sarah and also Susan Maxwell, 11, and Caroline Hogg, five. All three girls died in the 1980s. He is also charged with kidnapping Theresa Thornhill, 15, in 1988. Mr Black denies all the charges.
The prosecution alleges Mr Black, a van driver, of Stamford Hill, north London, committed the crimes while on delivery runs to northern England and Scotland.
Kevin Monaghan told the court he was walking to a phone box at Morley, near Leeds, when he noticed a man who looked like Peter Sutcliffe, the 'Ripper', who is serving life for serial murders between 1975 and 1980.
The man looked like Peter Sutcliffe because he had black hair and a beard. 'He was loitering as if looking out for someone,' said Mr Monaghan. 'He was standing still and just looking suspicious.'
Lesley Appleyard, who lived near the Harpers, said she also saw a bearded man with dark hair while walking her dog.
She said he looked like one of her neighbours but she told John Milford QC, for the prosecution, that it was not. She did not tell the police about the sighting initially as she thought it might put pressure on her neighbour, who lived alone.
The trial was adjourned until Monday.