Roy Evans, the Liverpool manager, wants the powerful forward as a partner for Robbie Fowler and is willing to beat Newcastle's offer of around pounds 4m, which was turned down by the South Coast club earlier this week.
Kenny Dalglish, the Magpies manager, had lined up Ostenstad as Les Ferdinand's replacement, with Newcastle yesterday confirming that they have accepted a pounds 6m bid for the striker from Everton.
However, Liverpool could win the race for Ostenstad if Southampton lower their pounds 7m valuation. Ostenstad has been a success since his pounds 1m signing from Viking Stavanger less than a year ago.
Ferdinand will meet Howard Kendall, the Everton manager, today to discuss a move to Goodison Park after Leeds and Sheffield Wednesday said they were not interested.
David Pleat, the Wednesday manager, denied reports that he had made a pounds 5.2m offer for the 30-year-old England international, while Leeds also said they had not tried to sign him.
Pleat said: "We have not made an offer. We are aware of many players' situations this summer, no more than that."
A Leeds spokeswoman, Liz Dimitrijevic, dismissed the club's interest in Ferdinand as "pure speculation" and said: "Les Ferdinand is not someone the manager is looking at." Meanwhile, Tottenham Hotspur yesterday reaffirmed their interest if Ferdinand was to decide on a move back to London.
Newcastle insisted yesterday that the transfer of the Italian defender Alessandro Pistone has yet to be completed. Reports from Italy on Tuesday said a pounds 4.5m deal for the 22-year-old Internazionale left-back had been agreed.
However, Freddie Fletcher, the Newcastle chief executive, said that although discussions had taken place with the Serie A side and the Italy Under-21 international, the transfer had not yet been finalised.
Aston Villa have agreed to split the difference and pay Leicester pounds 1.35m for defender Simon Grayson. The clubs could not initially agree on a transfer fee which was set to be decided today by a tribunal.
Villa were offering pounds 750,000 and Leicester asking pounds 2m for their player of the year, but the two parties finally settled on a compromise figure after re-opening negotiations.
Birmingham have written off pounds 1.4m in less than 48 hours with their decision to make winger Ricky Otto available on a free transfer. Otto cost a then club record fee of pounds 800,000 when signed by Barry Fry from Southend two and a half years ago.
It follows City's loss of pounds 600,000 on striker Mike Newell in selling him to Aberdeen for pounds 175,000 after he cost pounds 775,000 from Blackburn 12 months ago.
David Sullivan, the club's owner, said: "Our wage bill is very high, and as a business we must try and break even and make funds available to buy new players. If players are not in the team and have no chance of playing, what is the point of running up bills? Otto could have gone to Peterborough at the end of last season for pounds 50,000 but said no."
Sullivan said Trevor Francis still has around pounds 2.7m available for new signings and the manager is looking at Israel's most prolific goal-scorer, Alon Mizrahi. The Israeli is due to fly to Birmingham today for talks about a pounds 600,000 move to St Andrews.
The striker, who plays for Bnei Yehuda, has been Israel's top scorer for three of the last five years, and has been on trial in Germany with Stuttgart and Swiss club Basle.
Manchester United youngster Jonathan Macken has joined Preston North End for pounds 250,000. The Manchester-born striker has been with United since 1994 and signed professional forms last year.
The 19-year-old had been on the fringe of United's first team without making a senior appearance, but helped the reserves and A sides to win their respective league championships last season.
More football, page 27Reuse content