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.