The Blues have been tracking the 6ft 2ins Benfica star for some time, and face stiff competition from Real Madrid and Barcelona.
But manager Roberto Mancini has identified the 23-year-old as a major star of the future - and he likes the fact that Luiz, principally a central defender, is also comfortable at left-back and as a defensive midfielder.
Benfica have been bullish about keeping hold of the £25m-rated Luiz, especially as their Portuguese title win at the weekend, means they will be in the Champions League, easing their financial problems.
They have been citing a £43m release clause in Luiz's contract, which still has two years to run. That fee would eclipse the world record for a defender, held by United's Rio Ferdinand.
Luiz has been likened to Ferdinand. A Brazil Under-20 international, he is tall, athletic, quick, good in the air, not afraid of a tackle, as well as being composed and a decent passer of the ball.
He may immediately be seen as the solution to City's weakness at left-back this season.
City are already close to strengthening the right side of defence by bringing in 6ft 3ins Germany international Jerome Boateng from Hamburg for £11m.
Benfica Stars Fund
Benfica say they are in no rush to sell Luiz, and want him to stay for at least another season, but they could fall foul of their own fund-raising initiative, the Benfica Stars Fund.
The Portuguese side set up the Fund last year to raise money for investment by selling "shares" in their greatest assets - 17 of their players.
As a result, Luiz is 25 per cent owned by supporters and shareholders via the Fund - and they are intent on making a profit when the player is sold on.
If a club makes a healthy bid for Luiz and the stakeholders want to sell, Benfica would either have to go along with the sale or stump up a quarter of the £18million at which the player was valued when he was "floated" in the Fund.
The problem is that the Eagles are over £10m in debt and would struggle to raise the cash.
Luiz has been a revelation for Benfica, and his central defensive partnership with his countryman Luisao has been a key factor in the club's drive to their first league title for five years.
Signed from Brazilian side Vitoria five years ago, Luiz has played 84 games for Benfica and has scored four times.
He is on the brink of the Brazil squad for the World Cup, having picked up 24 caps for the country's junior teams, but is only expected to be on the plane to South Africa if more experienced stars are injured.
Would you like to see Luiz at City? Have your say.
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Showing comments 1 to 25 and replies | View All
the city boys, the mighty Stockport (12/05/2010 at 10:22)
Chapman (12/05/2010 at 10:25)
Michael knightons tash, Outside manchester (12/05/2010 at 10:29)
He ticks all the right boxes tall physical, adaptable, right age, and fast and can do something a lot of our current defenders can't and thats defend.
Hell of a lot of money but i guess that wont be a problem, only seen him play once so hard to judge but well regarded by all the big clubs in europe.
Eduardo Anton (12/05/2010 at 10:32)
City Slipper, Manchester (12/05/2010 at 10:39)
I don't fancy us paying £43 million for someone only on the fringes of the Brazil squad but, by the sounds of the clubs finances, we won't have to, assuming there is some substance to this story.
The Times reports that we are also after Marek Hamsic and Balotelli. I doubt that we are after Balotelli but, if we are, I hope we include a clause to the effect that, if he spits his dummy out, he doesn't get paid.
Evan Georgiou (12/05/2010 at 10:42)
dr.spock, sweden (12/05/2010 at 10:42)
Drew Peacock (12/05/2010 at 10:44)
aahdlee, Slough (ex Walkden) (12/05/2010 at 10:53)
bluelight, Levenshulme (12/05/2010 at 10:59)
bubba, cleethorpes (12/05/2010 at 11:00)
TheCat, Manchester (12/05/2010 at 11:07)
True Blue,Galway.Ireland, Galway (12/05/2010 at 11:21)
luke.Lincoln (12/05/2010 at 11:22)
Love the Glazers, Hate United, Gorton (12/05/2010 at 11:22)
georgehannahwasmymatesdad, Chorlton (12/05/2010 at 11:24)
proudtobeblue (12/05/2010 at 11:24)
moss side refugee in pembroke, pembroke dock (12/05/2010 at 11:26)
Blue Arriviste, Mancheter: of course... (12/05/2010 at 11:39)
Went to Wembley in '56, USA (12/05/2010 at 11:40)
Blue Arriviste, Mancheter: of course... (12/05/2010 at 11:48)
moss side refugee in pembroke, pembroke dock
12/05/2010 at 11:26
The first poster on here is a BITTER rag trying to enjoy the vicarious excitement of City buying players as his own club is skint.
YadYads (12/05/2010 at 11:48)
Leighton Baines?????!!!!!
Are you for real? I trust Mancini's judgement over yours i think!! Don't know much about this fella but i reckon he is a damn sight better than that scouse Gippo Baines...
Giggsy's chest rug! (12/05/2010 at 11:52)
the city boys, the mighty Stockport
12/05/2010 at 10:22
i appreciate the sense of humour!
Bad Dave, Sale (12/05/2010 at 11:55)
Never Boo a Blue and FFS Stay Till the End, Sale (12/05/2010 at 11:59)