The 25-year-old midfielder, who is due in Nottingham for talks and a medical today, is keen to return to English football following a spell with West Ham two seasons ago. Benfica are willing to let the Portuguese international join Forest on loan for the rest of the season with a view to a permanent move if he impresses in the club's fight for Premiership survival.
Ron Atkinson, who has already added Carlton Palmer to his squad since becoming Forest's manager, is also hoping to sign the American full-back John Harkes on loan.
Arsenal are having talks with Kaba Diawara, a 23-year-old striker valued at pounds 3m. His club, Bordeaux, accepts that the France Under-21 international is unsettled and Arsenal have until midnight on 31 January to conclude a deal.
Bordeaux, who are challenging for the French title, have already earmarked an unnamed replacement. Their coach, Elie Baup, said: "If Diawara comes back he will be on the bench until the end of the season."
At Highbury, he would join six other French players under their French manager, Arsene Wenger.Reuse content