Bayern Munich boss Carlo Ancelotti has conceded that his team "could have played better" in Wednesday's Champions League clash with Atletico Madrid, which the German outfit lost 1-0.

In a battle between the two favourites for Group E, it was Atletico that came out on top at the Vicente Calderon courtesy of a first-half strike from Yannick Ferreira Carrasco.

Ancelotti has branded Atletico "a very good team and difficult to play against", but the Italian is still confident that his side can top the section ahead of the return match at the Allianz later this month.

"It was a tough game, as we expected. We could have played better. We lost some balls and got hit on the counter. They scored and then I think we tried to get back into it but we were too slow. And for that I do not think we had too many chances to get back into it," Ancelotti told UEFA.com.

"Losing is always sad. You never want to lose. We need to evaluate the game. Look at what we did well and did not do well and go forward. We are at the start of the season.

"We still have the chance to top the group and we will need to beat Atletico in the return game to do so. It is a very hard place to come. Atletico are a very good team and difficult to play against."

The defeat to Atletico was Ancelotti's first loss as head coach of Bayern.