The 17-year-old, who celebrates his 18th birthday next week, has attracted interest from a number of Europe's elite clubs and is believed to have a £1.2m release clause in his contract, which expires next summer.
According to the Daily Mail, Leeds have held talks with Espanyol about signing Fernandez for a fee lower than his release clause, and they hope to reach an agreement in January.
However, Marcelo Bielsa's side face stern competition from both Man City and Barcelona, who are confident in luring the teenager away from the RCDE Stadium.
Fernandez is yet to make a single appearance for Espanyol's senior side, though he is highly regarded as one of their brightest prospects in the academy and is expected to leave the club in the near future.
The teenage forward was born in Spain though his family are from England and they are prepared to accompany him wherever he decides to move next. body check tags ::