Clermont, who took fellow Scotland open-side John Hardie on trial earlier this season, were among those keen to sign the all-action 27-year-old.
However, Watson is poised to extend his stay at Richard Cockerill’s in-form club, where he has spent his entire senior career.
A blistering carrier and excellent breakdown operator, he is a vital player for club and country.
The flanker has started 11 of Scotland’s last 12 Tests but is likely to miss at least the first two games of the Six Nations Championship with a hand injury.
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Winger Darcy Graham and scrum-half Henry Pyrgos are also understood to be in advanced re-signing talks with Edinburgh, who booked a Murrayfield date with Munster in the Heineken Champions Cup quarter-finals by beating Montpellier on Friday.
Graham, 21, has been in scintillating form this season, scoring seven tries in 12 appearances, and is a strong contender to win his second cap in Scotland’s Six Nations opener against Italy.
Pyrgos turns 30 this year and narrowly missed out on selection for Gregor Townsend’s championship squad. However, his nous, distribution and game management have been central to Edinburgh’s astonishing rise under Cockerill.
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