Marca claimed on Friday that Spain and Real's all-time leading goalscorer is linked with a €40million switch to the Eastlands.
Raul reaffirmed the speculation, but rejected the offer, according to the daily newspaper.
"Manchester City have made contact through my agent Gines Carvajal. But I've not really considered it because I would be mad to leave here," Marca quoted Raul as saying on Saturday.
"I'm only interested in finishing my career with Real."
Contrary to Raul's declaration to Marca that there was contact with City, Hughes refuted the claims of the renowned Spanish paper.
"We keep on getting linked with players and that's going to happen every week," Hughes told Sky Sports News, referring to Raul's transfer rumors.
"I think maybe if you work back to where the story originated, I would suggest it's come from Spain, it's not come from England."
Since their takeover by Abu Dhabi Group last year, City have been willing to break the bank by making lofty bids to some of Europe's finest superstars.
The Citizens are expected to make a huge impact on the transfer market this summer, thanks to their free-spending policy.
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Raul snubs City, Hughes denies interest
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