Liverpool Transfer News: Latest on Isco, Steven Gerrard and Marco Reus Rumours

Improving Real Madrid star Isco has reiterated his desire to remain with the European champions, ending Liverpool's hopes of signing the classy midfielder.

Isco has shot to increased prominence in recent weeks, making huge strides in the Madrid setup during Gareth Bale's recent injury stint. Carlo Ancelotti recently admitted the player is in the "best form since he got here," per Peter McVitie of Goal.com.

Although Liverpool were among the clubs previously linked to Isco's signature, Chisanga Malata of the Daily Star reports the player doesn't see his future taking place away from the Bernabeu:

"

My feelings on my career at Marid are very positive. I'm in the best team in the world, we are winning titles, we achieved La Decima (last season) and hopefully we can continue that. I think the best place to keep winning titles is Real Madrid.

"

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Brendan Rodgers' side take on Madrid in the Spanish capital on Tuesday. The Champions League fixture appears to be weighted in favour of the hosts, who easily triumphed 3-0 over the English side during October's reverse fixture.

Liverpool's chances appear so limited, in fact, that Rodgers is reported to be on the verge of dropping Steven Gerrard in order to keep him fresh for Saturday's visit of Chelsea, per Dominic King of the Daily Mail.

"I don't see it as a gamble," the Reds boss told reporters prior to the Madrid bout.

Football writer Jan Aage Fjortoft sees the potential plan differently:

Speculation continues to follow Gerrard. The 34-year-old midfielder has slowed down considerably and recently admitted he would have no problem playing for another club if Liverpool fail to extend his contract beyond the end of the season, per David Wright of the Express.

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Rodgers revealed to reporters that Gerrard is "very much" part of his plans, reported by the Liverpool Echo's James Pearce.

According to the Press Association (h/t ESPN FC), Manchester City boss Manuel Pellegrini then refused to rule out a move for the former England captain. It's a move former Liverpool defender Jamie Carragher believes supporters would never forgive.

"No, I don't think they would (forgive him)," Carragher revealed on Sky Sports' Monday Night Football (h/t Thomas Jacobs of the Daily Mail). "But I don't think Steven Gerrard would move to another [English] club." Carragher believes any switch "would be abroad, maybe the States or Europe."

Carragher also suggests Liverpool "will get it all sorted out in the next couple of weeks." 

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City could prove to be an irritant in the club's quest for Borussia Dortmund forward Marco Reus, who is now being tipped for a move to either the Sky Blues or Bayern Munich.

Ralph Ellis of the Daily Mail suggests "a £20-plus million battle" for the German international will ensue, with City willing to outbid Bayern on the wage front, "putting together a package worth in excess of £200,000 a week."

Bayern traditionally snap up the Bundesliga's best talent—with Mario Gotze and Robert Lewandowski heading from the Westfalenstadion to Bavaria in the last two seasons—making Reus' future appear ominous.

Bayern are capable of wearing Dortmund down until they give in, as we saw with the free transfer of Lewandowski.

Rodgers would be wise to search for alternative attacking additions. The manager needs Gerrard's leadership skills across the coming year but should also consider inflating the squad with a handful of proven world-class talents. Reus is the right stature of player, as highlighted below:

Plenty of cash was spent on the likes of Lazar Markovic, Emre Can and Mario Balotelli in the summer, and they have yet to consistently reach their potential at the top level.

Rodgers needs a mix of developing youth and ready-made performers to improve the side's one win in their last four matches.

Isco is someone the boss could have considered earlier, before he established himself at Madrid. His technical ability and work rate would have slotted straight into Rodgers' side, who need to up their creativity in the coming weeks.

This is likely to become even more apparent after the fixture with Madrid, who will be looking to exploit Liverpool's current lack of confidence with an entertaining show in Spain.