The reports from France's DCRI domestic intelligence service, seen by AFP, show that Merah was under intense surveillance throughout 2011 but that agents decided to reduce monitoring.
They show that Merah, who had been under surveillance since 2006, was identified as a "privileged target" at the beginning of last year after returning from a trip to Afghanistan, where he was detained in November 2010.
Surveillance from March to July indicated he was in regular contact with "the radical Islamist movement in Toulouse", said he was showing "paranoid behaviour" and that he was receiving funds from extremists.
Merah travelled to Pakistan between August and October last year and met with DCRI agents upon his return.
Despite the previous evidence, the agency concluded in November that only "selective" further monitoring of Merah was required, saying the meeting "did not allow for a link to be made between Merah and an eventual jihadist network".
French intelligence services have been repeatedly criticised for failing to prevent Merah's attacks.
Merah, a self-described Al-Qaeda sympathiser, shot a rabbi, three Jewish schoolchildren and three French paratroopers in attacks in and around the southern city of Toulouse last March, before being shot dead in a police siege.