Manchester City's European nightmare continued on Wednesday as the English champions fell to the Dutch champions, losing to Ajax 3-1 at the Amsterdam ArenA.

City has been largely unimpressive in Champions League play thus far, falling to Real Madrid on the first matchday before a late penalty kick from Mario Balotelli salvaged a point with Borussia Dortmund on the second matchday.

Roberto Mancini's men were hopeful of beginning Wednesday's clash on the right foot, but Ajax made the brighter start of the two sides as Siem De Jong and Christian Eriksen came close with scoring opportunities early on.

Nevertheless, the visitors managed to put the slow start behind them to take the lead in the 22nd minute. Micah Richards split the Ajax defense with a brilliant through ball to find James Milner, and the England midfielder picked out Samir Nasri on the left side of the box. The Frenchman was unmarked and made the Dutch side pay by curling a first-time effort past goalkeeper Ken Vermeer.

Ajax continued to push and eventually tied it up before the halftime interval as De Jong took a low cross with great aplomb, hammering a one-time shot just inside the near post.

The Dutch side took the lead at the 57-minute mark when Niklas Moisander nodded a corner kick just inside Joe Hart's far post, and Eriksen extended the lead in the 68th minute when a deflection from his shot at the top of the box trickled past Hart.

The result moves Ajax to a two-point lead over Manchester City as the Citizens bottom Group D on one point.

In Group D's other match, Borussia Dortmund continued its impressive play by defeating Real Madrid 2-1 at Signal Iduna Park. The German champions move to the top of the group on seven points, one point better than the Spanish champions.

In Group C, Joaquin helped Malaga preserve its perfect start to the Champions League campaign by scoring the lone goal in the club's 1-0 defeat of AC Milan, and Alexander Kerzhakov converted a second-half penalty kick to lift Zenit to a 1-0 win over Anderlecht.

Malaga sits atop the group after taking maximum points from its first three games. AC Milan occupies second place with four points while Zenit and Anderlecht round out the table on three and one points, respectively.

In Group B, Arsenal was shocked with a 2-0 home loss to German side Schalke, and Olympiakos overturned a one-goal deficit to claim a 2-1 win over Montpellier.

Schalke moves to the Group B summit with seven points from three games, one point better than Arsenal, four points better than Olympiakos and six points better than Montpellier.

And in Group A, FC Porto came out on top of a 3-2 thriller against Dynamo Kyiv while PSG rode two first-half goals to a 2-0 defeat of Dinamo Zagreb.

Porto remains top of the group by improving to nine points while PSG keeps pace to improve to six points. Dynamo Kyiv picks up its first Champions League win of the season to rise to three points, and Dinamo Zagreb remains in search of its first point as it bottoms the group.