A newspaper has paid "substantial" damages to a student after it alleged she had called Rhys Jones' killer a hero during a TV interview.
Kelly Marshall, 18, from Liverpool, launched a libel claim after the Daily Star also wrongly accused her of being a member of the Croxteth Crew gang.
Her solicitor said the money would go to the Rhys Jones Memorial Trust.
Mercer was jailed for life for shooting Rhys in August 2007 as the 11-year-old walked home from football practice.
The 18-year-old was sentenced on 16 December, and two days later, the Daily Star published a front page story claiming Miss Marshall was Mercer's girlfriend and she had hailed him a hero.
The paper, owned by Express Newspapers, also alleged she had declared a pledge of loyalty to the Croxteth Crew gang, of which Mercer was a leading member.
Miss Marshall's solicitor, Helen Morris, told Mr Justice Eady at London's High Court that the student had been "very distressed" by the article, which appeared in print and on the newspaper's website.
"The truth is, contrary to the article, the claimant did not make any public statement following the conviction of Sean Mercer," she said.
"The claimant does not regard Mercer as a hero and would certainly never have made such a claim or sought publicity for it, in the aftermath of his conviction for such an appalling murder.
"The claimant is not and has never been a member of the Croxteth crew or any other gang. She has also never been Sean Mercer's girlfriend."
Counsel for Express Newspapers, Kate Wilson, said the company accepted the allegations were false and offered its "sincere apologies" to Miss Marshall.
It will also publish a summary of the court statement in the Daily Star.
Miss Marshall was not in court to hear the settlement statement. THE BBC