Sourcetree does not launch Beyond compare external merge tool

I found out that this happens when one of the files to be merged has been deleted. In that case, git prints out a command line prompt which sourcetree cannot handle. The git process then ends up hanging forever.

Best way to handle this is to kill the hanging git process and then make the choice manually using use mine/use theirs.

The issue for me was that I still had the Merge Tool listed as System Default. Changing that configuration also to be DiffMerge seems to have solved it: