Deportes Cuatro claim that Isco told a Malaga supporter after a training session that talks were taking place.
Isco has also been linked with Manchester City, who are likely to appoint Malaga coach Manuel Pellegrini to their managerial hotseat next week.
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Liverpool have unveiled their new home kit for next season, sticking with the hugely popular retro styling of the current shirt.
The reputation of the Premier League means it is the most popular and one of the most watched leagues in the world.