Soccer: Celtic - 1 Villareal - 1 Celtic live to fight another day and a UEFA Cup dream that at one stage looked dead and buried remains a tantalising possibility.

Martin O'Neill's team, though, will need to play much better in the El Madrigal Stadium next week than they did on their own ground as Villarreal showed more ambition and determination at Parkhead than Barcelona had shown in the previous round.

The Spaniards took an early first-half lead through Josico but Celtic equalised through Henrik Larsson on a night of unremitting drama.

The air of expectation inside Parkhead was immense as the home team set about the task of establishing their superiority from the outset.

Roared on by a huge crowd, the home side stormed the Villarreal area but failed to make an immediate breakthrough and promptly paid the price when Villarreal's first attack yielded the game's opening goal.

It was a ridiculous one for the Scots to concede as Roger Garcia flighted in a cross more it seemed in hope than expectation and the unmarked Josico rose to get the slightest of touches and leave David Marshall helpless.

It was the last thing Celtic needed after their adventurous start but it signified a priceless away goal for Villarreal, whose confidence duly soared as first Jose Mari went close with a free header from a cross by Rodolfo Arruabarrena and then Sonny Anderson raced clear on to a fine through ball from Roman Riquelme but sent his shot wide.

The transformation in the space of a couple of minutes was remarkable and for a while Celtic were obviously stunned.

Indeed it took them some considerable time to regain both their composure and their momentum - and at least now they were aware of the threat the Spaniards posed on the counter-attack.

It was certainly engrossing and in another flurry of activity Stephen Pearson was booked for a foul on Josico, Stilian Petrov saw a fine effort touched on to the outside of the post by Jose Reina and Josico was shown a yellow card for exacting revenge of Pearson.

It was proving to be a fraught evening for the home fans, who almost suffered further just before half-time when Jose Mari should really have done better than shoot over as he took a pass from Roquelme in his stride.

The start of the second period was every bit as explosive as the first as the two teams launched themselves into the fray with renewed fervour.

Villarreal should have gone further ahead with two outstanding chances and Celtic will still be cursing a Larsson effort that was disallowed.

Initially, it was the Spaniards who looked more dangerous as first Sebastian Bettaglia saw a shot blocked by Bobo Balde, and then Marshall did well to race out of his goal to deny Anderson.

Scotland's champions-elect are nothing if not resilient but in the 54th minute an incident happened that will still rankle at Celtic Park.

Larsson raced forward to block Reina's attempted clearance and when the ball rebounded into the net the Swede turned away in jubilation - until he noticed the assistant referee's flag signalling handball against him.

It looked to be a harsh decision and O'Neill certainly thought so as he prowled the touchline in such a fury that eventually the referee had to have a quiet word.

But there is nothing like perceived injustice to get Old Firm fans going and as the stadium rocked to one Celtic attack after another there was a certain inevitability about the equaliser.

It duly came after 64 minutes and predictably fell to Larsson, who took full advantage of Reina's flap at a Didier Agathe cross to nod home.

The Swede, having a rollercoaster night, then missed a fine chance after being picked out by Pearson before, on 82 minutes, Alan Thompson was booked for a foul on Jose Mari and will miss the next leg through suspension.

Celtic manager O'Neill was upbeat despite the scoreline.

"In the second half, we were terrific. We played some great football on a brilliant surface," he said. "It must have been a great game to watch and we fought our way back into it.

"Villarreal are a very good side and they have proved that. It will be difficult but we will go there with plenty of confidence.

"We know we are capable of going away from home and getting a result."

CELTIC: Marshall; Agathe, Balde, Varga, McNamara, Petrov, Lennon, Pearson (Miller 79), Thompson, Larsson, Sutton. Subs not used: Douglas, Valgaeren, Lambert, Mjallby, Beattie, Smith. Booked: Pearson, Larsson, Thompson. Goal: Larsson 64.

VILLARREAL: Reina; Javi Venta, Ballesteros, Coloccini, Arruabarrena, Josico (Marti 78), Riquelme, Roger, Battaglia, Jose Mari, Anderson. Subs not used: Lopez Vallejo, Victor, Quique Alvarez, Calleja, Arzo, Verza. Booked: Josico, Roger. Goal: Josico 9.

Referee: Kyros Vassaras (Greece).