* City trail Liverpool by four points after 3-2 loss to Palace
* Ilkay Gundogan headed City in front in 27th minute
* Jeffrey Schlupp levelled in 33rd minute
* Palace went ahead with stunning volley from Andros Townsend
* Luka Milivojevic’s penalty put Palace 3-1 up
* Kevin De Bruyne cross-shot got City back in game in 85th
* City next at Leicester, Palace host Cardiff
Dec 22 (Reuters) - Manchester City suffered their first home Premier League loss in eight months as a shock 3-2 defeat by Crystal Palace on Saturday left Pep Guardiola’s champions trailing leaders Liverpool by four points.
City, who had won all nine home games in the league this season, are in second place on 44 points with Liverpool, who won 2-0 at Wolves on Friday, on 48.
German midfielder Ilkay Gundogan nodded City in front in the 27th minute, meeting a Fabian Delph cross from deep with a firm, downward header.
But Jeffrey Schlupp brought Palace level with a low diagonal shot into the bottom corner and Andros Townsend stunned the Etihad Stadium with a sensational volley.
Bernardo Sivla’s header out was met first time by Townsend who blasted his volley from 30 metres past helpless City keeper Ederson.
Palace went 3-1 up through a Luka Milivojevic penalty in the 51st minute after Kyle Walker brought down Max Meyer inside the box.
Guardiola brought on substitutes Sergio Aguero and Kevin De Bruyne and it was the Belgian midfielder who gave the home side hope with a cross-shot in the 85th minute that caught out Palace keeper Vicente Guaita.
Gabriel Jesus missed a stoppage-time chance when he headed over a De Bruyne cross from a promising position but City were left to taste their first home league loss since the Manchester derby on April 7.
Roy Hodgson’s Palace had picked up just one point from their last six away games and had not won at City since 1990.
Reporting by Simon Evans, editing by Ed Osmond