The two Premier League clubs were put on alert after it was suggested that the Brazilian was ready to leave after struggling to fully establish himself in Paris.
Having arrived at PSG from Roma in July 2013, he managed a total of just 58 Ligue 1 starts in his first three years at the club.
However, he has impressed new manager Unai Emery and says he is now ready to extend his current contract, which runs out in 2019.
He told RMC Sport: “After conversations with my family and PSG, who once again demonstrated their absolute confidence in my future, my work, my qualities, I was happy to stay in Paris and I am happy here.
“A contract extension? Of course. If things continue like this and I still feel happy here, of course there is a desire to prolong my stay.”