--- a/mercurial/merge.py
+++ b/mercurial/merge.py
@@ -489,14 +489,19 @@ def update(repo, node, branchmerge, forc
     p1, p2 = pl[0], repo.changectx(node)
     pa = p1.ancestor(p2)
     fp1, fp2, xp1, xp2 = p1.node(), p2.node(), str(p1), str(p2)
+    fastforward = False
 
     ### check phase
     if not overwrite and len(pl) > 1:
         raise util.Abort(_("outstanding uncommitted merges"))
     if pa == p1 or pa == p2: # is there a linear path from p1 to p2?
         if branchmerge:
-            raise util.Abort(_("there is nothing to merge, just use "
-                               "'hg update' or look at 'hg heads'"))
+            if p1.branch() != p2.branch():
+                fastforward = True
+                branchmerge = False
+            else:
+                raise util.Abort(_("there is nothing to merge, just use "
+                                   "'hg update' or look at 'hg heads'"))
     elif not (overwrite or branchmerge):
         raise util.Abort(_("update spans branches, use 'hg merge' "
                            "or 'hg update -C' to lose changes"))
@@ -525,7 +530,7 @@ def update(repo, node, branchmerge, forc
     if not partial:
         recordupdates(repo, action, branchmerge)
         repo.dirstate.setparents(fp1, fp2)
-        if not branchmerge:
+        if not branchmerge and not fastforward:
             repo.dirstate.setbranch(p2.branch())
         repo.hook('update', parent1=xp1, parent2=xp2, error=stats[3])
 

--- a/tests/test-newbranch
+++ b/tests/test-newbranch
@@ -51,4 +51,15 @@ hg id
 hg branch foobar
 hg up
 
+echo % fastforward merge
+hg branch ff
+echo ff > ff
+hg ci -Am'fast forward' -d '1000000 0'
+hg up foo
+hg merge ff
+hg branch
+hg commit -m'Merge ff into foo' -d '1000000 0'
+hg parents
+hg manifest
+
 exit 0

--- a/tests/test-newbranch.out
+++ b/tests/test-newbranch.out
@@ -84,3 +84,18 @@ 67ec16bde7f1575d523313b9bca000f6a6f12dca
 bf1bc2f45e83
 4909a3732169 (foo) tip
 abort: branch foobar not found
+% fastforward merge
+adding ff
+0 files updated, 0 files merged, 1 files removed, 0 files unresolved
+1 files updated, 0 files merged, 0 files removed, 0 files unresolved
+(branch merge, don't forget to commit)
+foo
+changeset:   6:9cc105113eeb
+branch:      foo
+tag:         tip
+user:        test
+date:        Mon Jan 12 13:46:40 1970 +0000
+summary:     Merge ff into foo
+
+a
+ff