"The latest offer we made was rejected and it's difficult to see an agreement being reached," spokesman Jesus Gomez said, adding that Antonio Alvarez, a member of the club's technical staff, would oversee first team training on Friday.
Aragones, 71, led Spain to victory at Euro 2008 and had a spell as Sevilla coach in the mid-1990s.
They suffered a surprise Champions League exit to CSKA Moscow last week and Tuesday's draw meant they had failed to win in seven matches in all competitions.
The club are fifth in La Liga on 45 points, two behind Real Mallorca who occupy Spain's fourth Champions League qualification spot.
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