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Celtic manager Neil Lennon insisted the Scottish champions' bid to qualify for the last 16 of the Champions League remains intact despite falling to two late goals against Group H rivals AC Milan.

Celtic beat Barcelona at home and Shakhtar Donetsk home and away during last year's group campaign to make the last 16 where the Scots were eventually humbled by Juventus.

This season Lennon's men battled through a tough qualifying campaign to be drawn again with fellow former champions Barcelona, Ajax and Milan.

However despite dominating the Rossoneri for long spells at the San Siro, the Scots failed to convert several chances on Wednesday and went down 2-0 inside two second-half minutes when Emilio Izaguirre turned in Cristian Zapata's low shot and Sulley Muntari pounced on a rebound from a Mario Balotelli free kick three minutes later.

Despite Celtic losing 20 of their last 22 away encounters in the competition, it was a harsh result for the visitors, who sit bottom of the group ahead of their meeting with Barcelona in two weeks' time.

Lennon claimed the scoreline was generous to the seven-time European champions.

"We're bitterly disappointed," said the Northern Irishman. "I think the scoreline flatters Milan tonight."

But he saw enough to believe Celtic have the quality and belief to force their way out of the group and into the last 16 for the second consecutive season.

"I was very confident going into the game, given the mentality of the team and the condition of the team," added Lennon.

"I don't know why anyone is so surprised. We've got an excellent side, we made the last 16 last year and that wasn't a fluke.

"We had good spirits coming into the game and we fancied getting some kind of result from here. It does heighten the disappointment when you play so well."

A raft of injuries to key Milan players including Kaka and captain Riccardo Montolivo forced coach Massimiliano Allegri to reshuffle his squad and gave Celtic hopes of causing a major upset at the San Siro.

But after a superb second half from the visitors, in which striker Anthony Stokes notably hit the woodwork with a curling free kick, Milan broke the deadlock when Celtic goalkeeper Fraser Forster was wrong-footed by Zapata's deflected shot.

Three minutes later the big keeper performed heroics to keep out Mario Balotelli's curling free kick, but Sulley Muntari was quick to pounce on the rebound to virtually seal the win on 85 minutes.

It was a positive end to what has been a frustrating few weeks for Milan, who lost their Serie A opener to new boys Verona, beat Cagliari 3-1 at home and then eked out a 2-2 draw away to Torino last Saturday.

In between, the Rossoneri lost several key players to injury including defenders Ignazio Abate and Mattia De Sciglio, as well as Montolivo and newly-signed Brazilian playmaker Kaka.

Massimiliano Allegri was forced to re-jig and despite Milan looking dangerous while on the offensive, it was far from a convincing display from the hosts.

Allegri later admitted: "It was an important win for us, especially as we suffered in the second half. We were lucky tonight, but I think the lads played a solid game under the trying circumstances."

Milan will travel to Ajax, trounced 4-0 by Barcelona on Wednesday, in two weeks' time.

Remembering last season's heroics against Lionel Messi and co. at Parkhead, Lennon is hoping for more of the same: "We've got Barcelona coming up, who are a different animal. But we've played against Barcelona in the last year and I hope the players hold on to the feeling of disappointment from tonight and take it into the game.

"We're here to compete, we're here to try to qualify and nothing changes after tonight's performance."