The 18-year-old Spaniard is delighted with the new contract.
"I am really happy. Liverpool are one of the biggest clubs in the world and this is the right place for me," he told the official site.
"I am happy Brendan has shown trust in me. I had no questions about signing a new deal and I am really glad to have done so.
"I am comfortable here. I have played some games for the first team and I hope to continue doing that, but I need to work hard every day for that to happen.
"This is one of the best days of my life."
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