Arsenal have rejected a £50m offer from Manchester City for Alexis Sanchez, according to Sky sources.
Sky Sports News reported earlier on Tuesday that City were preparing to make an offer for the Chile international, with manager Pep Guardiola keen to secure his services before the close of the summer transfer window.
It is understood City remain committed to a cash deal and no sum was mentioned in terms of an improved offer for Sanchez.
Despite turning down the offer, Sky Sports News understands Arsenal would consider the option of England winger Raheem Sterling being included in any deal that takes Sanchez to the Etihad.
However, any deaI involving Sterling would also include Arsenal paying a fee to City as a makeweight.
Sanchez has less than 11 months remaining on his current contract and is yet to sign terms on a fresh deal at the Emirates.
Arsenal denied claims Sanchez had handed in a transfer request on Monday night, but Chilean media T13 reported on Tuesday that the 28-year-old had asked to leave the Chile training camp to "conduct personal business".
Arsene Wenger has reiterated his desire to keep Sanchez throughout the summer and said earlier this month that he hoped the former Barcelona man would extend his contract.
Sanchez made his first appearance of the new Premier League season in the 4-0 defeat to Liverpool on Super Sunday having been given extra time off in the summer after competing for Chile at the Confederations Cup in Russia.
During the competition in Russia, Sanchez was asked by Sky Sports News whether he would remain at Arsenal beyond this summer's window and replied: "I don't know."
Sanchez enjoyed his most prolific scoring campaign for Arsenal last season, netting 30 goals in 51 appearances having been deployed in a central striking role.