Arsenal eye Ilkay Gundogan amid Manchester City contract talks - sources

Arsenal are interested in pursuing a deal for Ilkay Gundogan if the midfielder fails to agree terms with Manchester City, sources have told ESPN.

The 32-year-old is out of contract at the end of the season and has so far resisted City's attempts to tie him to fresh terms.

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Sources have told ESPN that City are so far willing to offer only a one-year extension, while Barcelona are prepared to hand him a two-year deal.

It is unclear at this stage what terms Arsenal are ready to put on the table but they are likely to have space in the squad for an experienced player with Granit Xhaka in talks to join Bayer Leverkusen in a deal worth around €15 million.

Arsenal boss Mikel Arteta wants to sign two central midfielders this summer with West Ham's Declan Rice and Brighton's Moises Caicedo on their shortlist.

However, Gundogan would be a far cheaper option and Arteta, a player he worked with during his three years at City as a coach under Pep Guardiola.

Arteta convinced Gabriel Jesus and Oleksandr Zinchenko to leave City for Arsenal last summer, and Gundogan's wealth of experience is viewed as a highly valuable asset.

Despite strong links with a move to Barca, sources have told ESPN that City have not given up hope of keeping Gundogan.

It was viewed as significant that Guardiola did not introduce the Germany midfielder as a substitute during the 1-0 win over Chelsea at the Etihad on Sunday, which could still be his last home game as a City player.

Guardiola was asked about Gundogan's future at a news conference on Tuesday but refused to give anything away.

"I can't tell you because I don't know," he said.

Sources have told ESPN that City are working on a compromise for Gundogan which could include a one-year contract with another 12-month option on top.