GLASGOW - SCOTLAND'S Euro 2008 dreams were cruelly crushed after a 2-1 defeat at home to world champions Italy on Saturday, courtesy of Christian Panucci's injury time winner.

Luca Toni had fired Italy into a second minute lead but Alex McLeish's side battled back bravely and deservedly levelled through captain Barry Ferguson in the second half.

Despite then bombarding Italy in the closing stages it was the visitors who scored the decisive second goal after the regulation 90 minutes had ended to book their own, and France's, place in the finals in Austria and Switzerland next summer.

Scotland manager Alex McLeish was bitterly disappointed and felt the result was unjust on his players.

He said: 'We didn't deserve to lose. It would have been a long shot if we'd drawn and needed France to lose to Ukraine, but it wouldn't have been the worst result.

'For the last 15 minutes we had Italy on the ropes and I thought we were going to Austria and Switzerland.

'I feel so disappointed for the players and it's very unfortunate we're not going to the finals but we've given a few of the big teams a scare on the way.'

Roared on by a capacity crowd of 51,301 Scotland needed a win to qualify for their first major finals since the France World Cup in 1998.

Nerves seemed to affect the Scottish players, though, and within two minutes they were trailing.

A quick throw-in caught their defence dozing, allowing Gianluca Zambrotta time to pick out Antonio Di Natale and his low cross was poked high into the roof of the net from close range by Toni.

There was then a major let-off for Scotland in the 32nd minute.

Scotland's goalkeeper Craig Gordon made a fantastic one-handed save to prevent Massimo Ambrosini's shot from finding the back of the net and although Di Natale converted the rebound the assistant referee ruled it out for offside.

With the final action of the first half only Andrea Pirlo's goalline clearance prevented Scotland equalising after David Weir's header, from Ferguson's corner, beat Italian goalkeeper Gianluigi Buffon.

Italy started the second half strongly but in the 64th minute Scotland got back on level terms.

James McFadden's low free-kick was deflected into the path of Lee McCulloch and although his shot from six-yards was straight at Buffon the Italian keeper somehow spilled the shot, allowing Ferguson to slide the ball home.

Scotland were now in the driving seat and in the 81st minute Kenny Miller, who had replaced Scott Brown in the 74th minute, drove the ball across the face of goal, taking Buffon out of play, but James McFadden rushing in at the back post could not turn the ball into the empty net.

And in injury time Scotland were dealt the cruellest of blows when Pirlo's free-kick was met by Panucci who sent a looping header over the stranded Gordon and into the corner of the net. -- AFP