Index: src/org/openstreetmap/josm/actions/MergeNodesAction.java
===================================================================
--- src/org/openstreetmap/josm/actions/MergeNodesAction.java	(revision 3592)
+++ src/org/openstreetmap/josm/actions/MergeNodesAction.java	(working copy)
@@ -89,7 +89,12 @@
     public static Node selectTargetLocationNode(LinkedHashSet<Node> candidates) {
         Node targetNode = null;
         for (Node n : candidates) { // pick last one
-            targetNode = n;
+            if (targetNode == null) {
+                targetNode = new Node(n, true);
+            } else {
+                targetNode.setCoor(targetNode.getCoor().interpolate(n.getCoor(), 0.5));
+            }
+
         }
         return targetNode;
     }