The Independent reports that their sources in Portugal says City have made a move for the Argentinian right winger.
Benfica have reportedly already begun the job to brign in a replacement for the 23-year-old winger.
Benfica president Luis Filipe Vieira Ferreira want €40million for the winger, but is reportedly prepared to compromise.
City signed Alvaro Negrado from Sevilla earlier this week and are also close to signing Stevan Jovetic in a £22.4million plus add-ons deal.
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Since Guus Hiddink arrived at the helm, Chelsea have improved considerably after a tricky start to the campaign.
Newcastle United are staring down the barrel of relegation to the Championship for the second time in the past eight years.