The Premier League side were pushing to complete a deal for the 27-year-old forward but disagreements with the Liga outfit over the transfer fee look set to scupper the deal
The striker was made City's prime forward target after Manuel Pellegrini's side refused to meet Edinson Cavani's buyout clause and the Premier League runners-up had been given the green light for a transfer, leading coach Unai Emery to concede that selling the Spain international would be the best option after signing Carlos Bacca from Club Brugge in his position.
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"We are far from reaching a deal with City," the 56-year-old told reporters. "Right now they are further away than where we were at [in negotiations] with Atletico Madrid. There have been advances but we are still far from a deal.
"Sevilla have valued the player at a certain amount and that will vary depending on if it's a fixed sum or with variables. Either they pay what we ask, or the player stays with Sevilla for another three years.
"The chance that he goes right now is one per cent. In the last 15 days I have lowered the price by €0, I'm very generous.
"The substitute for Negredo is Negredo. For me the best thing is that he renews his deal for another two years and raises his [release] clause."