Manchester City have reached an agreement with Malaga starlet Isco, according to reports in Spain.

Isco is regarded as one of the finest young talents in Europe, and scooped the Golden Boy award for best young player in Europe earlier this season.

Manchester City have been linked with a move for the 21-year-old for some time, however the departure of Roberto Mancini and the impending arrival of Malaga boss Manuel Pellegrini has seen the deal gather pace.

According to AS, the Citizens have reached an agreement with Isco and now the  two clubs are negotiating a fee.

The paper claim City are reluctant to pay the £35 million release-clause written into Isco's contract, something they remain hopeful of reducing given Malaga's financial worries.

Newly promoted Ligue 1 outfit Monaco's interest is also said to have prompted City into action.

Mancini's exit from the Etihad Stadium, confirmed earlier this week, clears the way for Pellegrini to take over. 

Malaga have confirmed this morning that the Chilean is free to leave the club at the end of the season, with his unveiling as Manchester City boss expected in the coming days.

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