A statement by Porto to the Portuguese Securities Market Commission (CMVM) confirmed that a deal worth B£12million had been struck between the two clubs.
There has been no confirmation from City but the Premier League champions have long been linked with the player.
The statement read: "FC Porto hereby informs the market that it has reached an agreement with Manchester City for the permanent transfer of professional footballer Fernando Reges for 15million euros."
City were linked with a move for the 26-year-old Brazilian in January but a deal did not materialise.
With City restricted to a net spend of B£49million this summer as punishment for breaching UEFA's Financial Fair Play regulations, such a deal could represent good value.
Meanwhile, Press Association Sport understands City have no intention of selling striker Alvaro Negredo.
The Spaniard, who joined City from Sevilla last summer, has been linked with a move to Atletico Madrid.
But City have not received a bid from or had any contact with the Spanish champions over a potential B£20million switch, as has been reported.
Such overtures would not be welcomed and, in any case, City now have a higher valuation of the 28-year-old than the reported figure, which equals the amount they paid a year ago.
Negredo made an immmediate impact at the Etihad Stadium last season and he finished the campaign with 23 goals in all competitions.
The last of those strikes, however, came in January as the player lost form in the second half of the campaign after suffering a shoulder injury.
That slump cost him a place in the Spain squad for the World Cup in Brazil.
Now it has been claimed that he is unsettled and is being lined up as a potential replacement at Atletico for Diego Costa, who is heavily tipped to join Chelsea. David Villa has also left Atletico in a deal that will see him play for City's sister clubs in Melbourne and New York.
Negredo does hail from the Spanish capital and began his career with Real Madrid.
But City want to retain his services among a striking quartet that also includes Sergio Aguero, Edin Dzeko and Stevan Jovetic.
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