Liverpool are eyeing Real Madrid midfielder Fernando Gago.

The Daily Star says Real last night claimed Liverpool were negotiating with them for £15m-rated Gago.

But Liverpool boss Kenny Dalglish is only prepared to pay £10m for the Argentinian midfielder.

Reds director of football Damien Comolli is believed to have already opened talks with Gago's agent ­ Marcelo Lombilla over the possible move.

Gago is a defensive midfielder who would be a ­direct replacement for Javier Mascherano, who left ­Anfield for Barcelona a year ago.

Lombilla said: "Gago needs to play and Liverpool would be a perfect club for him, Fernando wants to get back on the pitch and ­return to the top level and at the moment that is not possible in Madrid."

Liverpool had positive ­reports on Gago ­earlier in the season.

A source at Madrid said last night: "Fernando knows that he has no future at the club.

"There has been interest in the past from some ­Italian clubs and Aston Villa, but Liverpool have shown the most interest."

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