Liverpool enter race to sign Wolfsburg striker Edin Dzeko but fear Manchester City's spending power

The Bosnia striker, 24, has a €40million (£34 million) release clause in his contract, which expires in 2013, and Wolfsburg hope that City’s interest will help them receive a figure as close to that as possible.

Wolfsburg had hoped to keep Dzeko until the summer but after a poor start to the season under Steve McClaren — they are 13th in the Bundesliga and out of the cup — they are prepared to let their star player go. Wolfsburg, who won the title in 2009 with Dzeko as top scorer, are open to Liverpool’s suggestion of taking players in part-exchange, with Ryan Babel and Daniel Agger the German club’s preferred options.

City have confirmed they have been in dialogue with Wolfsburg and it is understood they wanted to put Emmanuel Adebayor into a deal in part-exchange. Adebayor, however, does not want to move to the Bundesliga.

A deal for Dezko would be the biggest of what is set up to be a frenetic transfer window. It opens on Jan 1 and one senior club executive said, “I have never seen anything like it at this time of year. There are agents aggressively pushing players and sometimes several different agents all working for the same player.”

With some agencies understood to be in financial difficulty, and several clubs, especially on the continent, needing to sell to stave off financial pressure, there is value in a market which has previously proved a poor time to spend.

Still, clubs are sticking to inflated asking prices for top players, a distortion rival clubs are putting down to City’s spending power.

Chelsea, who are also monitoring developments with Dzeko, are prepared to pay 15million euros for David Luiz, Benfica’s Brazil defender, but the Portuguese champions are holding out for nearly double that. Once again City’s interest in the player, which was serious last summer but has cooled somewhat now, is giving Benfica reason to believe they can secure a large fee for their player.

City are targeting a small number of high quality recruits — the Brazil striker Hulk, who plays for Porto, is a player they are looking at should a deal for Dzeko fall through — and are looking offload players no longer in Roberto Mancini’s first-team plans. The club want to offload Emmanuel Adebayor, Joleon Lescott, Wayne Bridge, Rque Santa Cruz and Shaun Wright-Phillips, and will let Shay Given leave if a suitable replacement can be found.

At the bottom of the league, West Ham are seeking to recruit with Avram Grant seeking an attacking midfielder and a striker, with Monaco’s Congo striker Dieumerci Mbokani a target in the latter capacity. They are talking bullishly about hanging on to Scott Parker but will accept offers for Matthew Upson and Kieron Dyer, both on substantial wages and both on contracts that expire in the summer.