Lewis McGugan is likely to remain at Sheffield Wednesday beyond his initial loan spell but the Hornets will consider bids for the midfielder in January, the Watford Observer understands.

McGugan's current loan deal with Wednesday expires on January 1 but we understand an initial agreement has been reached for the 26-year-old to remain at Hillsborough until at least the end of January.

However, we have been told the Hornets would consider bids for a permanent move when the transfer window opens in two weeks and have made Wednesday aware of that.

McGugan was a regular during his first 15 months at Vicarage Road, making 44 appearances, but only featured in one of Slavisa Jokanovic's initial six games in charge and was allowed to leave on loan.

The former Nottingham Forest man has started in all four of Sheffield Wednesday's matches since he joined The Owls on November 19.

Watford forward Diego Fabbrini is another who will be allowed to leave the club in January.

The 24-year-old has only featured four times this season and his last outing came against Brentford on September 30.

The future of striker Mathias Ranegie is less clear. We have been told the Golden Boys have no immediate plans to loan out the 30-year-old.

His temporary stay with Millwall was cut short due to a lack of game time and he will be eligible for Watford from January 1 when his loan agreement expires.

The Golden Boys are not expected to extend Adlene Guedioura's stay at Vicarage Road beyond January 1, with the midfielder expected to join Algeria for the African Cup of Nations which starts on January 17.

And we believe there have not been any talks with Norwich City over extending Sebastien Bassong's loan beyond early January at present.

Watford would consider signing replacements for both Guedioura and Bassong in January should they return to their parent clubs, although the latter was initially signed as cover due to Gabriele Angella's injury and the Italian is fit again.

Swedish midfielder Melker Hallberg is one player to be linked with a loan move to Vicarage Road. The 19-year-old opted to sign a five-year contract with Udinese instead of the Hornets in the summer according to his agent and could be set for a loan move away from Serie A in January. However, the Golden Boys have not held any negotiations with Hallberg over a potential switch next month.

The Pozzos, who own Watford, Granada and Udinese, have been trying to sign left back Emanuel Insua, 23, from Boca Juniors and we have been told a loan move to the Hornets, via Granada, was considered.

It is believed talks with Granada have broken down and a Hornets source told us the club's shift to a 3-5-2 formation have meant the club are not as eager to add a specialist left back to the squad, with Ikechi Anya and Daniel Pudil currently competing for the left wing-back slot and Lloyd Dyer a more attacking option.