AC Milan have missed the chance to reach third in Serie A courtesy of a 2-0 defeat to Palermo at the San Siro.

Diego Lopez was forced into action to prevent Milan from falling behind in just the second minute as he denied Franco Vasquez with a low save after the Palermo midfielder was gifted a route into the box.

Despite looking vulnerable at the back, Milan could have been ahead had Andrea Poli found the target after being released by Jeremy Menez's clever flick.

The lead belonged to Palermo midway through the half when a dangerous corner was inadvertently headed in by Cristian Zapata, who was introduced as an early substitute after Alex picked up an injury.

Palermo quickly grew in confidence, and they doubled their advantage three minutes later when Paulo Dybala, who had already been denied once by Lopez, forced his way into the box before firing a powerful effort past the helpless Milan shot-stopper.

Milan continued to offer their rivals hope of adding more goals early in the second half as Vazquez tested Lopez once again with a dipping effort from 25 yards.

Filippo Inzaghi's reaction to his side poor performance in the opening 45 minutes was to introduce Stephan El Shaarawy, who came close to reducing the deficit with a curling effort that drifted inches wide of the post.

Palermo's defence looked comfortable for long spells, but were left breathing a sigh of relief when Fernando Torres fired wide after beating the offside trap.

The Spaniard's frustration continued late on when he headed wide from close range, much to the disappointment of the Milan supporters, whose wait for a response from their side ended in disappointment.