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Transfer news: Luiz Gustavo rejects Arsenal move in favour of Wolfsburg - reports

Brazilian defender had been close to a move to the Gunners but German newspaper Bild are reporting he has agreed a deal to stay in the Bundesliga

Arsenal appear to have missed out on another transfer target after reports in Germany claimed that Bayern Munich midfielder Luiz Gustavo has agreed a £17m move to Wolfsburg over the Gunners.

German newspaper Bild have reported the Brazilian international has chosen the Bundesliga club despite interest from Arsenal and Barcelona, after he accepted that he needed to move away from the Champions League winners if he is to keep up his chances of inclusion in the Brazil squad for next year’s home World Cup.

Gustavo had spoken out over a move to the Emirates, saying: “I have heard about the Arsenal interest. It's a big club we're talking about here so of course I'd like to play for them.”

This gave Gunners fans a welcome boost after a summer of transfer disappointments. Chief executive Ivan Gazidis made the unusual announcement of how much the club had to spend on transfer – around £70m – giving Arsenal supporters hope that the club might begin to spend on players having had a strict transfer policy in the past.

However, they saw top transfer target Gonzalo Higuain move to Napoli after Real Madrid hiked up their asking price to £34.5m, with Arsenal close to signing the Argentinian for £23m before the Italian side became interested.

Reported target Bernard moved to Shakhtar Donetsk for £21.4m, although whether Arsenal actually made a bid for the unproven midfielder is not known, and they continue in their pursuit of Luis Suarez despite reports yesterday that they could switch to Plan B and move for either Swansea forward Michu or Manchester City striker Edin Dzeko.

Manager Arsene Wenger had made an unsuccessful offer for Bayer Leverkusen midfielder Lars Bender, who would have fulfilled the same role as Gustavo, but the German club rejected the £18.5m offer as the 63-year-old Frenchman seeks to replace Alex Song, who left the Emirates last season and is yet to be replaced by a natural defensive midfielder.

A bid was also launched in January for Toulouse midfielder Etienne Capoue, who today joined arch-rivals Tottenham for £11m after he passed a medical at White Hart Lane.

An official statement on the club website said: “We are delighted to announce that we have reached agreement with Toulouse for the transfer of Etienne Capoue.”

Arsenal have made just one signing this summer, with the addition of French Under-20 striker Yaya Sanogo on a free transfer, but he is highly unlikely to lead a Premier League title campaign that Gunners’ fans are demanding.

It’s not all doom and gloom though. Current stars Theo Walcott and Santi Cazorla were both on target yesterday in the victories for England and Spain respectively, and they head into their Premier League opener against Aston Villa this weekend on the back of a 3-1 victory against Manchester City last Saturday.