After making a late bid for the Porto winger, who is also in talks to join Spurs, the Reds are in pole position to sign him.
The manager of the first choice for the summer transfer window was the one who accelerated their plans due to strong interest from Spurs.
According to reports, the initial 37 million dollars is offered by the Reds, with bonuses included in the deal that will only be triggered if Diaz becomes a big success at the club.
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A timescale of about 72 hours is expected for a deal that has been complicated by the player being in South America, but Sky Sports News has been told that a team has been sent to Argentina to do a medical.
He is set to play in the first of two World Cup qualifers for Argentina on Tuesday.
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Spurs have been in talks with Porto over the past week and are said to be willing to pay up to 46 million dollars.
Sources in Portugal claim that Spurs are prepared to offer 38.6m up front for Diaz, with an additional 9.2m in performance-related add-ons.
In 28 games this season, Diaz has 16 goals and six assists for Porto.
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It's another blow for Spurs this month, after the breakdown of the deal for Wolves' Adama Traore, who looks set to return to Barcelona.
Sky in Italy is reporting that Spurs are in talks to sign a player from Fiorentina on loan, with a buy option, and that they want to make at least one signing this month.
They could do more business if they were able to sell Dele Alli.
Paris Saint-Germain are close to a deal to sign a Spurs player on a loan with an option to buy.
Sky Sports reporter.
It is far from done and could easily come to nothing.
The deal Liverpool are looking at for Diaz would €45m (£37m) plus a maximum of €15m in bonuses. Klopp’s first choice for the summer brought forward because it was clear player would move and wouldn’t be available. Still far from done, but they’re trying.
— Vinny O'Connor (@VinnOConnor) January 28, 2022
If it gets completed, the deal is very close to a Diogo Jota-type fee. It is better value than the original price.
The plans were brought forward because it was clear that the player would move on if they didn't act this window.
The player is in South America with his national team so it will be difficult to complete the deal.
If it gets done, it will be a big coup for Julian Ward, who is going to be the next sporting director. It was a deal in which Ward lead for the first time, but it is fair to say that he has been supported by Edwards who put together the strategy to secure the player this month.
His headline stat in the Portuguese Primeira Liga this season suggests he provides serious goal threat, but also offers so much more.
The winger ranks top for goals, shots and touches in the opposition box and is among the elite for winning back possession in the final third and attempting fast breaks.
The top five per cent of wingers in Europe's top leagues hit the outer rim across a raft of attacking metrics, according to the radar graphic below.
The maps below show his goal threat in the past two seasons and show that he is the most potent from his left channel.
His most striking attribute is participation in overall play, with above-average numbers for passes in the final third, but the graphic below suggests he also tracks back to support the team.
When looking at his goal and passing averages, he emerges among an elite group of players in Europe's top leagues, with returns on par with Benzema and Salah.
His heat map shows his work-rate with a lot of activity in his defensive half, while his ability to get possession high up the pitch would suit a high-press style.
The clock is not running. The transfer window closes at 11pm on January 31.
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