git mergetool from next not working in subdirectory

Hi,

I just upgraded to the current 'next' version of git (v1.6.1.2-418-gd79e69c). When I run git mergetool from a subdirectory in my workspace I get the following output: (with obfuscated output..)

~/src/rep/subdir $ git mergetool Merging the files: a/b/file.c

git checkout-index: subdir/subdir/a/b/file.c is not in the cache
git checkout-index: subdir/subdir/a/b/file.c is not in the cache
git checkout-index: subdir/subdir/a/b/file.c is not in the cache
Normal merge conflict for 'a/b/file.c':
  {local}: modified

  {remote}: modified

Hit return to start merge resolution tool (kdiff3):

When I hit enter the merge resolution finishes right away and the file ends up empty.

Note how subdir is duplicated in the output above.

This works perfectly fine with the 'master' version (1.6.1.2-253-ga34a).

Regards, Jonas