Pep Guardiola has not ruled out the possibility of Manchester City going toe-to-toe with Real Madrid in the ongoing battle for Monaco wonderkid Kylian Mbappe.

Reports in Spain claimed Madrid have agreed what would be a world-record €180million deal with the Ligue 1 champions for the France forward, who is one of Europe's most sought-after prospects.

It was later reported Monaco have denied such a deal is in place and, while Madrid are still thought to be leading the race for his signature, City are said to be preparing a rival bid.

Guardiola, who is also believed to be chasing Arsenal forward Alexis Sanchez, kept his cards close to his chest in regards to City's interest, but did not categorically rule out an approach.

"They are Monaco and Arsenal players, so [I have] nothing to say," Guardiola told a news conference.

"The player [Mbappe] is still at Monaco, he's still on that team.

"But anything can happen and we're still looking at other players in the market."

City have already spent big in the window, with over £200million paid out to land Ederson, Bernardo Silva, Kyle Walker, Danilo and Benjamin Mendy.

But Guardiola defended City's huge outlay.

He added: "It's a lot, but I think that 10 years ago Real Madrid paid £30m for Pepe and Barcelona £37m for Dani Alves.

"That period was amazing, and now it increases a lot. I couldn't imagine two or three years ago paying £100m or £120m for a player, but now it happens and it will happen more.

"I would like to pay less, but the market is the market."