Chelsea and Arsenal are circling Fluminense for 18 year-old winger Wallace. The youngster has been likened to Inter Milan fullback Douglas Maicon and intermediaries believe he is already good enough to play for a Champions League club in Europe.

Chelsea have been in contact with Wallace for over 18 months, but now face competition from Arsenal.

The Blues have first option on Wallace thanks to Deco's move to Flu in 2010.