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The Croatia international has voiced his delight with the former Liverpool man's extension, and has warned that Los Blancos cannot afford to spill any points against Espanyol

Luka Modric believes that Xabi Alonso's contract renewal is "great news" for Real Madrid.

The 32-year-old Spain international appeared on the verge of leaving Los Blancos on a free transfer in the summer, but ended all speculation about his future earlier this week by signing a two-year extension, much to the satisfaction of his Croatian colleague.

"We’re all happy that Xabi Alonso has renewed," Modric told his club's official website. "We expected it and that’s great news that he’ll be with us for another two years."

Modric has been in fine form for Carlo Ancelotti's side this season and he freely admits that he is currently enjoying something of a purple patch.

"I feel good on the pitch and the key is that I have the confidence of the coach and my team-mates," the former Tottenham ace enthused.

The playmaker then went on to discuss Sunday's La Liga clash against Espanyol and stressed that Madrid cannot afford to drop points in Catalunya.

"We have to get ready for the next match, which will be tough," the 28-year-old warned. "It’ll be the third match we play this week, but we have to win to close the gap with Atletico, Barcelona or both."

Madrid currently sit third in the league table, trailing city rivals Atleti and reigning champions Barca by five points, with the top two set to meet at the Vicente Calderon on Saturday evening.

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