How Loki wagered his head (Edda Resenii) - Scandinavian folktale

Loki, the son of Laufey, out of mischief cut off all the hair of Sif. When Thor discovered this he seized Loki, and would have broken every bone in his body, only he swore that he would get the black dwarfs to make hair of gold for Sif, which should grow like any other hair.

Loki then went to the dwarfs that are called the sons of Ivallda. They first made the hair, which, as soon as it was put on the head, grew like natural hair. Then they made the ship Skidbladnir, which always had the wind with it wherever it would sail. Lastly, they made the spear Gugner, which always hit its mark in battle.

Then Loki wagered his head against the dwarf Brock, that his brother, Eitri, could not forge three such valuable things as these. They went to the forge. Eitri set the bellows to the fire, and bid his brother, Brock, blow. While he was blowing there came a fly that settled on his hand and bit him, but he blew without stopping till the smith took the work out of the fire, and it was a boar, and its bristles were of gold.

Eitri then put gold into the fire, and bid his brother not stop blowing till he came back. He went away, and the fly came and settled on Brock's neck, and bit him more severely than before, but he blew on till the smith came back, and took out of the fire the gold ring which is called Draupnir.

Then he put iron into the fire, and bid Brock blow, and said that if he stopped blowing all the work would be lost. The fly settled between Brock's eyes, and bit so hard that the blood ran down so that he could not see. So, when the bellows were down, he caught at the fly in all haste, and tore off its wings. When the smith came he said that all that was in the fire was nearly spoiled. Then he took out of it the hammer, Mjolnir. He then gave all the things to his brother Brock, and bade him go with them to Asgard, and settle the wager.

Loki produced his articles, and Odin, Thor, and Frey were the judges. Then Loki gave to Odin the spear Gugner, and to Thor the hair that Sif was to have, and to Frey Skidbladnir, and told them what virtues those things possessed. Brock took out his articles, and gave to Odin the ring, and told him that every ninth night there would drop from it eight other rings as valuable as itself. To Frey he gave the boar, and said that it would run through air and water, by night and by day, better than any horse, and that never was there night so dark that the way by which he went would not be light from his hide. The hammer he gave to Thor, and said that it would never fail to hit a troll, and that at whatever he threw it, it would never miss the mark, and that Thor could never throw it so far that it would not return to his hand. It would also, when Thor chose, become so small that he could put it in his pocket. The only fault of the hammer was that its handle was a little too short.

Their judgment was that the hammer was the best of all the things before them, and that the dwarf had won his wager. Then Loki prayed hard not to lose his head, but the dwarf said that could not be.

"Catch me, then!" said Loki, and when the dwarf sought to catch him he was far away, for Loki had shoes with which he could run through air and water. Then the dwarf prayed Thor to catch him, and he did so. The dwarf now proceeded to cut off his head, but Loki objected that he was to have the head only, and not the neck. As he would not be quiet, the dwarf took a knife and a thong, and began to sew his mouth up; but the knife was bad, so the dwarf wished that he had his brother's awl, and as soon as he wished it, it was there. So he sewed Loki's lips together.