Reports over the weekend suggested City boss Mark Hughes was weighing up a move for the tricky winger.
Benayoun has failed to hold down a regular place in Rafa Benitez's starting XI, fuelling talk that he could leave Anfield.
However, Benayoun's representative Ronen Katsav insists the player is happy at Liverpool, having only signed a new deal in the summer.
"Naturally a player playing well at Liverpool will always have other teams interested in him," said Katsav
"It is a great compliment that there is interest from high level teams across Europe, but Yossi is very happy at Liverpool and only in the summer agreed a new four-year contract."