That bug was fixed here: http://git.savannah.gnu.org/cgit/gnulib.git/commit/?id=b9c364f02cb7a7485cd063fa2cbcbf82042fa8cc
I think you'll run into other bugs when you try to compile diffutils 3.5 with GCC 7, though. We should generate a new diffutils version soon, to work around the glitches we've fixed since 3.5 came out.
