England's dream start turned into a night of misery as Portugal came from two goals down to win 3-2 in Eindhoven.

Paul Scholes and Steve McManaman scored inside the first 20 minutes of a Group A encounter that raised fresh doubts about England's defence, and David Seaman in particular.

The Arsenal keeper looked far from his best as classy Portugal made the most of their opportunities and ended worthy winners.

England got off to the best possible start with a goal inside three minutes. David Beckham picked up the ball wide on the right and put in a perfect cross for Scholes to head home via the underside of the crossbar.

The goal lifted England and their noisy fans inside the Philips Stadium.

But Portugal hit back, and a Luis Figo corner caused problems for David Seaman after seven minutes.

Seaman was in trouble six minutes later when he missed Manuel Rui Costa's lightning cross but Joao Pinto miscued his header from five yards.

The Arsenal keeper made amends in the 15th minute when he dived high to his left to save Rui Costa's dipping shot.

England's second goal after 18 minutes was a beauty. Once again Beckham was the creator as he cut in from the right and crossed for McManaman to smash the ball past Baia.

Kevin Keegan's side were in dream land, but they were brought down to earth when Figo put Portugal back in the game with a stunning goal in the 22nd minute.

His strike from more than 25 yards left Seaman standing as the ball flew into the top corner.

The high-octane action moved rapidly from end to end as the classy Portuguese tried to pick holes in the England defence.

But Michael Owen had a half chance from Alan Shearer's cross, and Scholes went close with another effort.

Portugal equalised after 37 minutes when Joao Pinto headed home from Rui Costa's searching cross from the right.

Once again Seaman was left flat-footed as the ball looped into the top corner.

Emile Heskey replaced the injured Owen at half time, but it was the Portuguese strikers who created the first chance of the second half.

Figo's corner was missed by Seaman, presenting Joao Pinto with a chance that he put over the bar.

England responded with a sweeping move that ended with Phil Neville putting in a cross which Shearer headed wide after outjumping Baia.

McManaman limped out of the action with a knee injury in the 58th minute to be replaced by Dennis Wise.

Portugal took the lead a minute later with a first international goal from Nuno Gomes. England's defence was all at sea as Gomes evaded Tony Adams' last-ditch tackle to shoot home from 10 yards.

It was only the third time in five years that England had conceded three goals.

The goal was no more than Portugal deserved as England struggled to come to terms with the slick midfield play of Rui Costa and co.

England pushed men forward in search of an equaliser, and Scholes and Heskey had openings that were slammed shut by defender Jose Vidigal.

Portugal were a constant threat on the break, and Seaman had to race out of his goal to clear from Gomes.

Gomes did beat Seaman after 75 minutes but his effort was ruled out for a marginal offside decision.

There was still life in England, and Scholes twice went close in the 78th minute. First he saw his shot blocked and then he headed just wide.

Martin Keown replaced Adams after 82 minutes as England searched desperately for a late equaliser. Scholes seemed to be their best hope, and he had another shot blocked in the 82nd minute.

But Portugal had the class, character and know-how to keep England at bay, and Kevin Keegan's side looked well beaten at the end.