Transfer news: Chelsea and Manchester City 'target' Xabi Alonso ends speculation by signing new Real Madrid deal

Local media reports the former Liverpool midfielder has agreed a two-year extension

Spain midfielder Xabi Alonso has agreed a two-year contract extension with Real Madrid, local media reported today, without identifying their sources.

The 32-year-old's current deal expires at the end of the season and the lack of an announcement of a new contract had prompted speculation Alonso might accept a lucrative offer from a Premier League club, with Chelsea and Manchester City mooted as possible destinations.

He has agreed a two-year extension with an option for another year and will be paid a net salary of £5m-a-season, Spanish media said.

Real were not immediately available to comment on the reports.

Alonso's poise and passing ability have been crucial to the Madrid club's success in recent years and Carlo Ancelotti's side have looked vulnerable when he has missed games through injury.

He is in his fifth season at Real having joined from Liverpool in 2009.

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