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.
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