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Jewelled Dagger
(Weapon carried in the hand) This Special Item can be used in combat as if it were a normal Weapon. The Jewelled Dagger's bonus to your COMBAT SKILL should only be applied when the Jewelled Dagger is used in combat. You should not use your Wizard's Staff at the same time. This would incur the normal -6 penalty to your COMBAT SKILL for not using your Wizard's Staff.
Alternatively, you may decide that the Jewelled Dagger may be wielded together with your Wizard's Staff, and thus confers its bonus in all close combats. This makes the Jewelled Dagger a much more useful item.