Costa is currently a free agent after terminating his contract with Atletico Madrid towards the end of 2020.
The 32-year-old Brazilian-born Spanish international was reported to have agreed a contract with Jorge Jesus’ men by some Spanish tabloids earlier this week but Benfica insist that is not the case after releasing a statement on their official website to clarify the issue.
'Benfica denies that any negotiations have taken place regarding the signing of forward Diego Costa,' the statement read.
'The club reiterates that until the end of the season their entire footballing professional structure's focus will only be on the remaining 10 games of the league season and the Taca de Portugal final.'
Benfica are currently third on the Portuguese league table, 13 points behind leaders Sporting Lisbon.
The Eagles have a date with Sporting Braga in the Taca de Portugal final on May 23.
Costa suffered a number of fitness issues and poor form after returning to Atletico Madrid from Chelsea in January 2018. He scored two goals in seven La Liga appearances this season before having his contract terminated due to personal reasons.
Costa won the La Liga title with Atletico in his first spell at the club and added the Europa League trophy in his second.
