AS Roma defender Aleksandar Kolarov scored the only goal of the game to secure the three points for Serbia who go four points clear at the top of the group.
Martin O'Neill made two changes to the side which claimed a 1-1 draw in Georgia on Saturday as Norwich City playmaker Wes Hoolahan and Hull City midfielder David Meyler came into the side for Glenn Whelan and Harry Arter.
The changes definitely had the desired effect as Ireland dominated the early stages of the game and Serbia rarely threatened. In fact, O'Neill thought his side had the dream start when Shane Duffy nodded the ball in the net from a Robbie Brady cross in the 10th minute, but it was collectedly ruled out for offside.
Serbia had their first real chance of the game just past the half-hour as Aleksandar Mitrovic had Darren Randolph at full stretch. Kolarov was played into the left-side of the area by Dusan Tadic and his low cut-back from the byline found the Newcastle striker who saw his goal-bound shot brilliantly palmed away.
Despite Ireland's dominance of possession, Serbia had another good chance to go ahead four minutes from the break. Once again, Kolarov's pace down the left saw him dig out a cross towards Antonio Rukavina but his shot was placed a yard over the top right-hand corner.
In the 54th minute, Serbia took the lead. A well-worked move from right to left on the edge of the area saw Tadic find Kostic who laid the ball into the path of the onrushing Kolarov, who powered the ball home past Randolph.
O'Neill brought Daryl Murphy on for Wes Hoolahan and the Nottingham Forest forward's influence saw Serbia reduced to ten men. A Shane Long header saw Nikola Maksimovic struggling to beat Murphy to the ball and after bringing down the Irish striker with a reckless challenge, he was shown a straight red card in the 68th minute.
The sending off saw Ireland begin to pour forward as David Meyler rasped a fierce shot wide of the right-hand post in the 71st minute before Ireland were denied a penalty five minutes later. Substitute Callum O'Dowda turned past Branislav Ivanovic to cross for Murphy who appeared to be held by Stefan Mitrovic but the referee waved the protests away before Cyrus Christie fired wide.
Five minutes from the end, Murphy was at the centre of the action once again as he collected Shane Long's header to see his first shot blocked but his second shot brilliantly saved by Vladimir Stojkovic from just inside the area.
Conor Hourihane fired past the left-hand post moments later and in the final minute of the game, Hourihane once again fired wide from a Shane Duffy knock-down.
In stoppage-time, James McClean smashed the ball well wide from just outside the area, Ireland's final chance of the game, which sees Martin O'Neill's side drop to third in Group D with games against Moldova and Wales remaining.
Teams
Republic of Ireland: Randolph (GK), Christie, Clark, Long, Brady, McClean, Hoolahan (Murphy 61), Ward (O'Dowda 71), Meyler (Hourihane 79), Walters (C), Duffy.
Subs not used: Westwood (GK), Elliot (GK), O'Shea, Keogh, Whelan, Horgan, Long, Hayes, Arter.
Serbia: Stojkovic (GK), Rukavina, Ivanovic (C), Mitrovic (Prijovic 79), Tadic (Gudelj 81), Kolarov, Vukovic, Millvojevic, Kostic (S Mitrovic 72), Maksimovic, Matic,
Subs not used: Jovanovic (GK), Rajkovic (GK), Obradovic, Nastasic, Tosic, Gacinovic, Spajic, Radoja, Ljajic.
Referee: Cuneyt Cakir (TUR)
Yellow card(s): Rukavina, McClean, Brady, Stojkovic.
Red card: Maksimovic
via GET Sportonline
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