Manchester City have been dealt a blow in their pursuit of Paris St Germain midfielder Blaise Matuidi, with reports suggesting the midfielder is close to agreeing a new contract with the Ligue 1 giants, reports talkSPORT.

The Frenchman has been in fine form this season, and enjoyed another excellent performance in the Champions League on Tuesday, scoring the first and setting up another for Zlatan Ibrahimovic as PSG ran out 4-0 winners over Bayern Leverkusen.

In stark contrast, City crashed to a 2-0 defeat to Barcelona at the Etihad, and are now facing an almost impossible task to qualify for the quarter finals.

The 26-year-old is set to see his contract with PSG expire at the end of the season, and the delay in opening talks over an extension have seen City strongly linked with a move that would see him sign on a free transfer in the summer.

But sources in France are now claiming that the former St Etienne man is close to signing a new contract with the French champions, set to run until 2018, and be worth an annual salary of close to £5million.

City had previously been linked with another bosman signing, only to see midfielder Fernando sign a contract extension at Porto.

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