The 17-year-old has risen through the youth ranks at the Spanish side and now represents the Under-19 team, but he is yet to make an appearance this season.
With Sergio Aguero confirmed to be leaving Man City this summer, the Citizens are eyeing attacking reinforcements for the 2021-22 campaign.
While big names such as Harry Kane and Erling Braut Haaland continue to be mentioned, The Sun reports that Man City could instead look to welcome Fernandez back to the UK.
The report adds that the teenager's family is English and he may be open to a return to the UK, while City are understood to be impressed by his strength and technical quality.
Fernandez was an unused substitute in Espanyol Under-19s' goalless stalemate with Valencia Mestalla last Saturday.