The 20-year-old has penned a five-year contract keeping him at the Etihad Stadium until the summer of 2025.
Torres, who operates predominantly as a winger, made 44 appearances for Valencia last season, scoring six goals and has been touted as a Pep Guardiola favourite for a long time.
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"I am so happy to be joining City,” Torres said. “Every player wants to be involved in attacking teams and Manchester City are one of the most attacking in world football.
"Pep encourages a really open, aggressive style, which I love, and he is a manager with a proven track record of improving players. To have him overseeing my development is a dream.
City have won plenty of trophies in the last 10 years and I hope I can play a role in continuing that success.

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Director of Football Txiki Begiristain added: “We have followed Ferran’s progress closely and have been very impressed.
"He is young and still developing, but his technical qualities are exactly what we are looking for in a winger. He is quick, direct, can create space with one movement and is capable of producing match-winning moments.
"I feel this is the perfect place for him to develop and with Pep in charge he can take his game to the next level."
Torres made his first-team debut for Valencia in November 2017 as a substitute in a 4-1 win over Real Zaragoza in the Copa del Rey and went on to become the youngest player to make 50 La Liga appearances for the club.
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