Carlo Ancelotti has played down Everton's chances of mounting a challenge for the Premier League title this season.

The Italian boss, who last week celebrated a year in charge at Goodison Park, has guided Everton to second place in the table.

The Toffees lie in the top four at Christmas for the first time in 16 years after Gylfi Sigurdsson's 80th-minute strike gave them a fourth straight league win at Sheffield United.

The 1-0 victory left Ancelotti's team on 29 points from 15 games, two behind reigning champions, leaders and Merseyside rivals Liverpool, who are at home to West Brom on Sunday.

The 61-year-old, who is in his first full season as manager, has conceded that he never expected Everton to be so well placed heading into the second half of the campaign, but he insists the only objective remains to get the club back into Europe.

Asked if Everton were in the title race, Ancelotti said: "No, I think realistically no. We are really pleased to be second. We didn't expect that at the start of the season but we are there and we want to stay there.

"We are really pleased to be there but I think our target doesn't change. There is a lot of competition in the Premier League, a lot of good teams, and we are happy to be second now but our target is to reach a European position and to play in Europe next season, it doesn't change.

"I have to say that in one year we have progressed really well and we would also like to progress again next season."

Asked if a victory against Manchester City on Monday would change his mind about Everton's title credentials, Ancelotti replied: "It will be the same. We have to be honest with ourselves, we are not at the same level as this team, we would like to be as soon as possible at the same level and we are working for this but if you ask me today then I have to be honest."