City's players were withdrawn shortly before half-time in Novigrad, Croatia, after Seko Fofana was reported to have been subjected to the taunts by a member of HNK Rijeka.
A statement released by the Premier League champions states that the club's management took the decision to withdraw the team from the field of play and cancel the game.
The matter is now being discussed between City representatives, match officials and the Croatian Football Association over whether the matter will be pursued further.
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