Arsenal have agreed in principle to accept Manchester City's £60million offer for Alexis Sanchez.

City tabled a second bid for the Chilean international at lunchtime after having their opening gambit of £50million rejected by the Gunners yesterday.

It is understood that the increased offer – which will see City pay £55million up front and another £5million in add-ons – is deemed acceptable by Arsenal.

But the London club are waiting to see if their £90million offer for Monaco's Thomas Lemar is accepted before doing a deal with the Manchester club.

And the feeling at Arsenal is that they will run out of time to sign the Frenchman.

(Image: REUTERS)

(Image: REUTERS)

Paris Saint-Germain's Julian Draxler was another option but that too is unlikely to happen.

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Pep Guardiola made Sanchez a priority target when he accepted City's offer to become their manager early in 2016.

Arsenal were unwilling to do business last summer – but Sanchez has allowed his contract to tick down into its final year and the Gunners face losing the forward for nothing at the end of the season.

Arsene Wenger wanted Raheem Sterling included in a deal for Sanchez – but that idea was knocked back immediately by Guardiola.

Football Spy transfer update - Arsenal deadline day special

Arsenal then set the bar for the former Barcelona star at £70million, but know that they faced being left with an unhappy player who would join City for free next year.

Arsenal have been desperate to keep Sanchez out of the clutches of a Premier League rival.

But the 28-year-old priced himself out of moves to Bayern Munich and Paris St Germain by demanding wages in excess of £400,000-a-week.

City's package will be worth £300,000-a-week – less than what Sanchez could have earned at the Emirates – but it will be bolstered by a lucrative raft of bonuses.

City, meanwhile, have agreed a £170,000 fee with Borussia Dortmund for Jadon Sancho.

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The teenage winger has not been turning up for training after demanding a move away from the club, but City don't want him to join Manchester United, Arsenal or Tottenham.

They have now done a cut-price deal with Dortmund, but Sancho still has to agree personal terms.