The Daily Mail says Inter Milan had looked the most likely destination for the Brazil playmaker, but the Italians are ready to ditch their interest for fears of intense competition from Barclays Premier League sides looking to make an impact signing when the transfer window reopens.
However, it is unclear whether the Blues would be willing to splash out a hefty transfer fee after considerable belt-tightening at Stamford Bridge.
City have the resources and boss Roberto Mancini has indicated he will re-enter the market in January. Relations between City, Milan and Kaka were damaged by a botched bid to take him to Eastlands in January 2009, but the landscape has changed.
The player’s standing has declined, while City’s status has rocketed since then and a deal may now be attractive.