Everton have suffered a setback in transfer market as Valencia beat David Moyes’ side to sign Benfica midfielder Manuel Fernandes on six years contract, for a reported fee of £12.2million.

The Toffees had thought they had convinced the Portuguese to arrive at Goodison Park, where the 21-year-old had spent the second half of last season on loan, on a permanent deal.

Fernandes trained last week with the Toffees and was their guest to witness the home 1-1 draw against Blackburn Rovers on Saturday.

However, last night’s report on Valencia’s website baffled the Toffees and Fernandes has now confirmed that he has joined the La Liga side following his presentation on Monday at Mestella.

He said: "I thank Valencia for their confidence and hope to be in my new team for many years.

"I have spoken before with Miguel (Valencia's Portuguese full-back), and he has told me that it is a great club, with the possibility to grow."

The Toffees will now have to rethink their transfer strategy to bring in a midfielder as the window shuts August 31.