Portugal were bundled out of the men's soccer tournament at the Athens Olympics on Wednesday after a humiliating 4-2 defeat by Costa Rica.

Morocco's 2-1 victory over Iraq in the other Group D match ensured co-favourites Portugal became the biggest casualty of the first round in Athens.

Portugal, who were without suspended Manchester United midfielder Cristiano Ronaldo and Fulham's Luis Boa Morte, twice squandered the lead as they finished bottom of the group.

"We are very disappointed not to reach the quarter-finals," said Portugal's coach Jose Romao. "We were poor. This team really was capable of better things."

An own goal from Stuttgart defender Fernando Meira in the 68th minute brought Costa Rica back on level terms for a second time and substitute Saborio Alvaro struck again moments later.

Pablo Brenes added a fourth in injury time to send Costa Rica through and complete Portugal's misery in Heraklio, Crete.

The Portuguese, whose senior side were beaten finalists on home soil at Euro 2004, finished the match with nine men as they lost for the second time in three matches.

The men's tournament is an under-23 competition with three over-age players permitted per team.

Iraq, who also beat Portugal 4-2 in their first match, finished top of Group D on six points despite losing to Morocco.

DREAM RUN

The Iraqi players, who endured extreme hardship simply to reach the Athens Games, have been on a dream run after reaching the last eight of the Asian Cup last month.

They now play Australia in Saturday's quarter-finals, while Costa Rica meet favourites Argentina.

Meanwhile, Italy narrowly avoided the same fate as Portugal after they were beaten 1-0 by an impressive Paraguay in Group B.

Striker Fredy Bareiro headed a 14th minute winner to send Paraguay into the quarter-finals where they will take on South Korea.

Bareiro dedicated Paraguay's win to the victims of a supermarket blaze that killed more than 400 people in Asuncion earlier this month.

"This was for all the people who lost their lives in the terrible supermarket tragedy a few weeks ago," he said.

The Italians, coached by former World Cup winner Claudio Gentile, scraped through ahead of Ghana on goals scored after both teams finished with four points.

Italy play Mali -- the only one of four African teams to advance -- in the last eight.

Japan, who lost their first two games, extinguished Ghana's hopes with a 1-0 victory in Volos.