Real Madrid hints at Modric interest
Modric returned to training with Spurs this week, having been fined by the club for skipping sessions as he sets his sights on a move away from White Hart Lane this summer.
But Real appear his likeliest destination, a move which would allow Brazil international Kaka to end a largely ineffective spell at the Bernabeu.
Big-spending PSG have also been mooted as the 30-year-old's next stop and he did not travel with Real for Tuesday night's friendly away to Real Oviedo, which they won 5-1.
Karanka told AS: "We decided he would stay in Madrid. Kaka and the club are working to find a good solution for all parties."
Asked about Modric, he added: "Which club would not want a player like him?
"He is an outstanding footballer and had a great tournament (Euro 2012). It is clear that he would fit in Madrid."