By Alex Stevens
Everton are keeping close tabs on Brazil Olympic gold medallist Walace, according to a report.
The Mail claim the Merseyside club are in a three-horse race with Stoke and Leicester to sign the Hamburg midfield anchorman.
It is said that Everton and Leicester “like” the Brazil international, 21, while scouts from Stoke watched him in action for Hamburg in their 2-2 draw against Freiburg last weekend.
Walace joined Hamburg last month from Brazilian side Gremio in deal costing £8million and scored on just his second outing for his new club.
He has already won two full Brazil international caps in addition to his outings for the Under-23s in the successful Olympics campaign, where he lined up alongside the likes of Neymar and Gabriel Jesus.
Everton are next in action on Saturday when they host Sunderland in the Premier League in a match which brings ex-manager David Moyes to Goodison Park.
Ronald Koeman’s side have had an enforced two-week break due to their exit from the FA Cup at the third round stage.
They will be looking to continue the fine form that has consolidated their place at seventh in the league table.
In other Everton transfer news, the club have agreed the terms of an out-of-window striker transfer.