The 26-year-old has been linked to Wolves for some time and it is understood he remains on a shortlist of potential targets, as Wolves chase a midfield signing this summer.
Although Palhinha signed a contract extension with the club late last year until 2026, which reportedly has a £50million release clause, reports suggest that the midfielder will be available for a cut-price fee of around £21million.
Wolves boss Bruno Lage is keen on adding quality depth to his midfield with the futures of Joao Moutinho and Ruben Neves uncertain.
However, Wolves face competition for Palhinha’s signature with Tottenham, Leicester and Everton all reportedly interested.
Palhinha could offer Wolves the type of defensive midfielder they have been craving, as he specialises his game on winning tackles and interceptions.
Neves, who has two years left on his Wolves contract, is attracting plenty of interest from Europe’s elite clubs and hinted last week that he will leave the club if the right offer was made. Moutinho, however, is in discussions with Wolves over a new contract but the situation is very much up in the air.
Unless there is a swift breakthrough in negotiations, it is expected that Wolves’ released and retained list will refer to Moutinho as ‘in talks’ over a deal.
Among those out of contract players expected to leave the club are John Ruddy, Fernando Marcal and Romain Saiss.
Lage confirmed Marcal was due to depart last week, while Ruddy was told he was leaving earlier this week before later announcing it on social media – before Wolves made a separate announcement.
Saiss is also likely to leave, despite Wolves offering him a new deal.
“Maybe a week or two ago, I was closer to leaving than staying,” Saiss told French outlet Brut.
“Unfortunately, today that is probably what will happen.
“That’s it, I’m probably going to leave the club because I haven’t reached an agreement. Unfortunately, our paths are likely to separate.
“It’s a source of pride for me to have achieved everything I’ve achieved here with Wolverhampton, where, when I arrived, it was a second-class club, in the Championship, and we succeeded to climb to the top of the Premier League, to play in the Europa League, so it’s magnificent.”
Saiss added: “I am open to any proposal, I really want to be in a serious project that will also allow me to continue to progress.
“At an individual level, I am even very satisfied with my season, even if at the end it was a little more complicated because we had less good results.
“It’s true that we have a team where we don’t have a lot of players, so we don’t have a large squad, so at some point, we ended up with a few injuries, so it started to be a bit of a strain on each other’s bodies, but we held on and it’s encouraging for the future, we know we can compete with any team in this championship.”