Sunderland are hopeful of persuading Argentinian Julio Arca that his future lies on Wearside.
The 23-year-old has been linked with Manchester City as he enters the final year of his contract at the Stadium of Light.
But the Black Cats have denied that there has been an approach and confirmed they are in early talks over a new deal.
“We’ve not received an enquiry for Julio from Manchester City,” said manager Mick McCarthy. “But I’m not surprised there is speculation about him because he is a very good player.
“I’ve spoken to Julio, who has said he is very happy here, and the club and Julio’s agent have held very positive talks.”
Arca arrived at Sunderland in a £3.5m (€5.3m) from Argentinos Juniors in August 2000 and made an immediate impact in the Premiership as a left-sided midfielder as Peter Reid’s side secured their second successive top-seven finish.
He helped his country win the World Youth Championships the following summer but returned exhausted, and that, coupled with injury problems, saw his form dip.
However, McCarthy’s arrival catapulted him back into the frame at left-back, his favoured position and, although he spent much of last season back in midfield, he was a major influence as the Black Cats reached the semi-finals of the FA Cup and the Division One play-offs.
Arca is one of the few big names left at the Stadium of Light following a succession of high-profile departures since the club’s relegation from the top flight at the end of the 2002-03 season.