The 18 year old was supposedly told by Arsene Wenger that he could be loaned out for the rest of the season, but reports today claim that Liverpool have had a loan offer rejected for the Gunners number 32.
However Sven Goran Eriksson's Man City could still make an approach for the former Southampton striker. I think that with City's striker problem at the moment Walcott would be a welcome addition to the side. It would also provide more first team Premier League football for Walcott.