UEFA Nations League was introduced this year by European football’s governing body to replace friendly matches with competitive games in a mini-group format.
Riyad Mahrez twice forced good saves out of Liverpool keeper Alisson Becker but then failed to find the target from the penalty spot when it mattered most.
With this result, Man City return to the top of the table, ahead of Chelsea due to goal difference.
Manchester City midfielder Kevin de Bruyne will resume training shortly as he enters the last phase of his recovery from a knee injury that has kept him out of action since August, manager Pep Guardiola said.
Prp Guardiola played down any suggestion that the early-season demands on his players, most of whom played at the World Cup, had contributed to the Champions League setback.
Sergio Aguero is Manchester City’s all-time record scorer with 204 goals, including the stoppage-time winner against Queens Park Rangers in 2012 that won a first top division title in 44 years.
Mikel Arteta, who will lead City in their Champions League opener against Olympique Lyonnais on Wednesday because manager Pep Guardiola is suspended.
Leroy Sane scored inside two minutes with a close-range finish after Fernandinho capitalised on some sloppy passing from the visitors.
Manchester City’s income has increased six-fold in the past decade and they have risen from 20th to fifth in European clubs’ revenues league table.
Sergio Aguero has hit the ground running in the new campaign with three goals from four starts, including a hat-trick in the 6-1 victory over Huddersfield Town.
The England right back fired an angled shot into the bottom corner in the 52nd minute for his first goal in almost three years.
After City sold goalkeepers Joe Hart and Angus Gunn in the close season, Manchester City only has 21-year-old academy product Daniel Grimshaw as back-up to Brazilian international Ederson.
Prolific Sergio Aguero scored in the 25th, 35th and 75th minutes while also hitting the post in a devastating display against Huddersfield.
Kevin de Bruyne will miss up to three months of action but will not need surgery after scans revealed the full extent of his knee injury.
With the second round of Premier League matches upon us this weekend, a knee injury to Kevin De Bruyne has cast a rare cloud over the Etihad Stadium.