Arsenal are ready to resume talks with Ricardo Alvarez, despite competition from a quintet of Europe's elite, according to the Daily Mail.
The Argentine, who can play across the midfield, is being followed by a number of clubs including Inter Milan, Malaga, Sevilla, Roma and Schalke.
But Arsenal, who were in talks with Alvarez last month, lead the way for the 23-year-old.
Palermo president Maurizio Zamparini said: "We are very interested in Alvarez.
"But it will be difficult to bring him to Palermo considering that there are other clubs like Arsenal and Malaga interested in him."
Arsene Wenger is under pressure to bring new players to Arsenal after the club went trophy less for a sixth successive season, but the French boss is also trying to keep the club's star turns at the Emirates Stadium.