Eruo 2008 favorites Germany and ambitious Poland were snubbed on Thursday in their Group B second-round clashes with Croatia and co-hosts Austria respectively.

Germany saw an unwilling 1-2 defeat with Croatia in Klagenfurt, making the Balkan squad the first within Group B of Euro 2008 to elevate into the top eight of the 24-day tournament.

Poland, which is to co-host next European championship in 2012,had to face a 1-1 draw with Austria in Vienna due to a injury-time penalty from the current co-hosts.

Croatian midfielder Darijo Srna and striker Ivica Olic scored during the first and second half respectively while Germany's Lukas Podolski saved Germany's face by shooting one goal during the second half.

Croatia's Vedran Corluka (R) vies with Germany's Bastian Schweinsteiger during the Euro 2008 Group B football match on June 12, 2008 at Woerthersee Stadium in Klagenfurt, Austria. Croatia won 2-1. (Xinhua/Qi Heng)

In a sold-out Woerthersee Stadium of Klagenfurt, Germany coach Joachim Loew sent the same starting lineup as they did four days ago against Poland, with Miroslav Klose and Mario Gomez as strikers and Lukas Podolski, hero of Germany's last match, as the left winger.

As both teams have won their opening games, Germany and Croatia were battling for an early elevation from Group B, and the fight was fierce from the very beginning and both sides created many chances.

However, it is Croatia who turned the chances into reality as midfielder Darijo Srna, who repeatedly penetrated Germany's defense line, made a abrupt shot and scored in the 23rd minute after he got a long pass from left side.

Croatians got another precious chance to widen the gap with Germany in the 42nd minute as Kranjcar made a powerful shot in a close distance to Lehmann, who made a superb save by denying the shot.

Germany, widely regarded as favorites to Euro 2008 title, also created many scoring chances during the first half.

In the tenth minute, Podolski's shot was blocked by opponents' defender. Gomez, who repeatedly fell in the offside trap set by Croatian defense line, made a header a little bit higher than the cross-bar in the 25th minute.

In the 32nd minute, Ballack's powerful free kick was blocked by Croatia goalkeeper, who made several saves in the coming minute as Germany created chaos in front of Croatia's goal.

In the 39th minute, German defender Metzelder's header was narrowly above the crossing bar with a corner from Frings.

During the second half, however, Loew sent Real Betis striker Odonkor, Schalke 04 striker Kevin Kyranyi and Bayern midfielder Bastian Schweinsteiger to the pitch to sharpen Germany's offensive edge. Germany repeatedly attacked Croatia's defense line in the beginning of second half, yet without any good scoring chances.

Balance leveled to Croatia again in their counterattack in the 62nd minute.

Croatia's right winged cross is deflected onto the near post by Lehmann and bounces right in front of Ivica Olic who have no problems scoring Croatia's second, a decisive one for Croatia's celebration.

Germany continued their attack waves and they were rewarded in the 79th minute.

Podolski got the ball right in front of his feet in the Croatian area and used all his force to strike past Pletikosa for 2-1.

German fans' enthusiasm was flamed up but dampened during the injury time when Schweinsteiger pushed down Croatian midfielder Jerko Leko and got a direct red card, the first one for the tournament so far.

A 2-1 win is enough for dark horse Croatia to reach the quarterfinal of Euro 2008, while Germany has to wait till next encounter with co-hosts Austria in Vienna on June 16.

German coach Loew attributed the loss to poor forms and lack of cooperation between midfielders and strikers.

"We were far from performance we did against Poland," said Loew after the match.

"In the 2nd half, we had no pressure. Between midfield and front there was no compact storm, which has made the defense difficult," added he, with a grave face. "We have moved too little. We may have thought we had achieved something," said German captain Ballack.

Croatia coach Slaven Bilic was excited after the match, saying he was satisfied with his team's performance.

"We had the space closely and delivered the wings. This have made the Germans very difficult. I am satisfied with all players, otherwise you can not win a team like Germany," he said.