Thanks Lars_G and Hollowpoint. Much to my surprise given the Japanese origin I think Hollowpoint has nailed it!
Wikipedia says that the British bought 150,000 Arisaka rifles in 1914 and used them mostly for training. "The 6.5×50mm round was subsequently produced in Britain by the Kynoch company and was officially adopted for British service as the .256-inch (6.5 mm) caliber Mk II in 1917."
I think this example of Trench Art probably came from a Training Camp. I now doubt it was made in the front-line as I'd previously believed.
The item works well as a pen-knife and although easy to make must have been a desirable novelty. I wonder if the Swedish examples were manufactured by Mora and how many other nationalities have produced them?
Regards,
Dave