  We present inelastic neutron scattering measurements on liquid mercury at
room temperature for wave numbers $q$ in the range 0.3 $< q <$ 7.0 \AA$^{-1}$.
We find that the energy halfwidth of the incoherent part of the dynamic
structure factor $S(q,E)$ is determinded by a self-diffusion process. The
halfwidth of the coherent part of $S(q, E)$ shows the characteristic behavior
expected for a cage diffusion process. We also show that the response function
at small wave numbers exhibits a quasi-elastic mode with a time scale
characteristic of cage diffusion, however, its intensity is larger by an order
of magnitude than what would be expected for cage diffusion. We speculate on a
scenario in which the intensity of the cage diffusion mode at small wave
numbers is amplified through a valence fluctuation mechanism.
