City manager Mark Hughes has been handed a staggering £40m to spend in the January sales and is determined to increase his side's firepower.
West Ham striker Craig Bellamy is also on the City shopping list.
Owen has made it clear he is happy to stay at St James' Park until his contract runs out at the end of the season.
But Newcastle owner Ashley fears Owen won't sign the new four-year deal he's been offered and is loathe to see him leave the club on a free transfer during the summer.
Toon boss Joe Kinnear is desperate to cling on to Owen until the end of the season.
But Hughes believes Owen's experience could be vital as he tries to build a squad capable of living up to expectations of the club's rich Arab owners.
Hughes knows he has the funds to prise Bellamy from West Ham's grasp.
Tottenham boss Harry Redknapp had a £6m bid for Bellamy turned down on Boxing Day but Hughes is ready to make the Hammers a £10m offer that they might find hard to refuse.
Bellamy, who scored twice in West Ham's 4-1 Boxing Day win at Portsmouth, played for Hughes during his time in charge of Wales and Blackburn and although he would prefer to stay in London he might well be tempted by the opportunity to team up with his old boss - and the bumper salary on offer.

West Ham chief Gianfranco Zola has hinted he may quit if the club sell their top stars during the transfer window.
But after their win at Portsmouth, Zola admitted: "The club knows how important Craig is. It is a time of year when things are uncertain for many teams. It is for us as it is for others."
Hughes has been linked with a raid on Blackburn for Roque Santa Cruz, but new Ewood Park boss Sam Allardyce is determined to hold on to his most valuable asset.
This article has 7 comments
city cud go down this season i doubt it like but fate as a funy way of slapin u in the face sometimes be funy if they went down seein robinho in da championshiip cryin 2 go bk 2 madrid and the arabs munchin humble pie wer ritcher dan blah blah
By ironleee. Posted December 29 2008 at 2:08 AM.
Sell him now and recoup some of your money.Clubs made huge offers for Harry Kewell and in the end Leeds got petrol money for him.Newcastle needs a huge clean out as there are too many players living on past reputations.They should be in the top 5.If Hull can make it in their first year then any club can do it if you have a good manager and back up staff.Does Dennis Wise actually do anything?? Great job if you can get it.
By JOHN. Posted December 28 2008 at 9:23 PM.
let colin bell give the team a pep talk on playing with pride and never letting their heads drop
By mike nicholls. Posted December 28 2008 at 8:56 PM.
City need defenders. They score enough goals already, but can't defend. Richards has had an awful season, and City will only put themselves in more trouble if they don't buy defenders/defensive midfielders in Jan. Senna would be a good signing for half a season, and with the stupid money available they can buy themselves out of trouble.
By malky. Posted December 28 2008 at 11:44 AM.
I would have a new back four would be a better idea. You not only have to score goals but equally you should not leak goals, and at present tactics reflect their current league position. If the wrong players are bought they could be the richest team in The Championship.
By bob. Posted December 28 2008 at 11:09 AM.
super rich owners???? gna buy the worlds stars?? gna topple man united?? with the likes of craig bellamy or michael wont go-in owen?? dnt make me laugh
By michael brandrick. Posted December 28 2008 at 10:20 AM.
Who cares, really!
If managers loose games now, it's either the refs fault or they need to spend money on new players, of course they don't blame themselves or there tactics.
I miss the old English first division and 3 foreigner rule.
By Michael. Posted December 28 2008 at 9:12 AM.