Barcelona are said to be prepared to walk away from their long-standing transfer interest in Manchester City star Joao Cancelo.
The two clubs have been working on a deal to allow Cancelo to return to Catalonia since the start of the summer following his season-long loan spell at Barcelona in 2023/24.
Pep Guardiola previously indicated he would be open to bringing the Portugal international back into his plans if an exit package could not be finalized.
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Cancelo's willingness to reduce his salary allowed talks to progress but City remain steadfast in their determination to secure a £21 million ($28 million) transfer fee.
That falls outside Barcelona's budget, with the club already forced to offload key stars including Ilkay Gundogan to maintain financial balance.
Barca's preference was for another loan with a purchase clause at the end of the season, which City rejected, as per Mundo Deportivo.
That created a clear blockage in the negotiations and Barcelona have now stepped out of the race for the 30-year-old defender.
Cancelo remains a target for the Saudi Pro League, but he reportedly wants to remain in Europe and, if a compromise cannot be reached, he will remain at City for the 2024/25 campaign.
