Manchester City are in a three-way battle to sign Real Madrid midfielder Fernando Gago, according to sources in South America. Madrid are prepared to listen to offers for the 23-year-old as they try to recoup some of the £265million they spent in the summer.

Bernabeu boss Manuel Pellegrini is reluctant to let the Argentina international go, but Gago is unhappy at falling behind the likes of Lassana Diarra and Esteban Granero in the pecking order.

It is believed that his agent Marcelo Lombilla has tried to engineer the holding midfielder's return to Boca Juniors, whilst Juventus remain an interested party.