Both Manchester United and Liverpool are in need to bolster their midfield in January and have targeted the 26-year-old, whose contract will expire after the end of the season.
Earlier this week, Portuguese newspaper A Bola reported that the Brazilian midfielder, who recently became a Portuguese citizen, could be set to join David Moyes’ side before the transfer deadline day.
The midfielder, who joined Porto in 2007, was a key member of Andre Villas-Boas’ side that won the treble in 2010-11.
The Times now claims that Manchester City have not only joined the race to sign him but are looking favourites to beat other rivals as well. The player has held talks with several clubs, but is understood to favour City.
City, boosted by their increase in turn-over, are looking to persuade Porto to release him for a fee before the deadline day.