Eddie Howe has prioritised signing a prolific striker in the next transfer window and Nunez has been their top target heading towards the opening of business.
They enquired about signing him in January but the striker was not keen to leave and the club were putting plans in place to sign him in the summer.
But it has been claimed Newcastle are unlikely to find any luck in their attempts to sign the Uruguayan forward at the end of the season.
The information Newcastle have received from his camp is that Nunez does not want to join a club who are not in European competition.
Newcastle are ready to accept defeat in their pursuit of the 22-year-old and are prepared to move for other targets.
With clubs such as Arsenal, Manchester United and Atletico Madrid interested in him, Newcastle are aware they are unlikely to sign Nunez.
The Magpies are now preparing a move to re-sign their former player in Ivan Toney from Brentford.
The London club want in excess of £30m for Toney but are aware that the player wants to join a bigger club in the summer.
