Birmingham manager Harry Redknapp has the cash to sign the Uruguay centre-forward, who cost Hull £10m three years ago.
Hull have signed Jamaican international defender Michael Hector on a season-long loan from Chelsea.
The 25-year-old replaces the departed Curtis Davies, who joined Derby County along with teammate Tom Huddlestone, and has played 80 times at Championship level for Reading plus 22 games in the Bundesliga last season for Eintracht Frankfurt.
The Tigers are also eyeing Bournemouth’s Republic of Ireland midfielder Marc Wilson, 29, who spent last season with West Brom.
Leeds United are battling with Swansea City to sign Alvaro Negredo, the former Manchester City forward.
Negredo scored 10 times on loan for Middlesbrough in the Premier League last season and has been told he can leave Valencia.
Huddersfield Town and fellow promoted club Brighton are vying for Fiorentina’s 23-year-old Croatia striker Ante Rebic, who is valued at around £4m.
Barnsley manager Paul Heckingbottom is holding out for a substantial offer for Ghanaian defender Andy Yiadom, whom Swansea City want for £3m.
The Reds chief is more interested in making four new signings after Saturday’s 4-0 defeat at Rotherham, which he said was a wake-up call to his players.
“The players have to realise that you can’t play fancy, you can’t be soft in the Championship. You have to run hard, you’ve got to head the ball and want to win tackles. The only player definitely in contention for a start next week is Joe Williams because at least he got stuck in and made tackles.”
Millers chief Paul Warne was delighted to see new signing Jamie Proctor mark his New York Stadium debut with a hat-trick but said: “I thought the score flattered us a little bit. We were well worthy of four goals but we could have conceded a couple. I think we rode our luck a little bit.”
Sheffield United goalkeeper Simon Moore’s knee injury is less serious than was first thought and Chelsea loanee Jamal Blackman admits he will face tough competition to be the Blades No 1 this season with Jake Eastwood also aiming to force his way into Chris Wilder’s plans.
Bradford City manager Stuart McCall is chasing a central defender ahead of the season kicking off on Saturday.
Middlesbrough, who have made seven major signings so far this summer including £6.5m West Ham striker Ashley Fletcher on Friday, are also chasing a central defnder and two creative midfield players as they also target an instant return to the Premier League.