Manchester City are weighing up a fresh move for Real Madrid defender Pepe despite plans to offer Joleon Lescott a new contract, the Daily Mail reported.

City, who have closed a £24.5million deal for Sevilla striker Alvaro Negredo, have had a £15m bid rejected by Madrid, whose new boss Carlo Ancelotti is keen to keep the Portugal centre back. He is set to lose Raul Albiol to Napoli.

But Ancelotti has been told he must sell to help finance new signings and City must decide whether to raise their offer nearer £20m for a player who turned 30 this year.

Either way, they have already decided to give Lescott a new one-year deal with director of football Txiki Begiristain set to open talks with the England defender and his representatives over the next 48 hours.

Lescott has one year left on his contract.

Sevilla president Jose Maria Del Nido warned that the Negredo deal was on the brink of collapse, but it is understood that the two clubs are close to completing a transfer worth £21.5m with £3m in add-ons.

Negredo is expected to confirm the move today.