Manquillo remains Gunners boss Arsene Wenger's first-choice right-back option, but talks with Atletico Madrid have stalled.
Wenger wants to buy a young understudy to new senior right-back Mathieu Debuchy.
He is keen on Manquillo, but Atletico refuse to do business over a permanent transfer. A loan deal remains an option, though not favoured by Wenger.
Talks, meanwhile, have opened with Catania for young Argentine Peruzzi.
For the big stories and the banter follow us on Twitter: @tribalfootball
Need a VPN? Or seeking to switch? Then support Tribal Football by clicking here to sign up with our official partners NordVPN. Not only will you receive the best VPN experience, but also great discounts by signing up via Tribal Football. Thanks for your support!