Germany coach Joachim Loew has admitted title talk is cheap after his young team showed plenty of potential at Euro 2012, but came up short when it mattered in its 2-1 semifinal defeat to Italy.

Italy striker Mario Balotelli broke German hearts on Thursday with a first-half header and a rasping drive to leave the Germans on the ropes and 2-0 down at the break.

Germany bounced back and gave itself a faint lifeline with a 92nd-minute penalty from Mesut Ozil, but it was too little, too late.

Germany's Holger Badstuber and Thomas Mueller (right) after Germany's loss. [Photo/Agencies]

For all its promise as one of the pre-tournament favorites, along with Spain, after winning all 10 of its Euro 2012 qualifying matches, Loew's team had its 15-match winning streak in competitive matches abruptly ended by the Italians.

The solid defense the Germans are known for was exposed by Balotelli's power and pace, while the silky skills of midfielders Bastian Schweinsteiger and Ozil fell short against the Italian midfielders Andrea Pirlo and Riccardo Montolivo.

Ozil was only one of several Germans who lost out in comparison with the street-wise Italians, but Loew, who is under contract until the 2014 World Cup, said Germany's time will come.

"That's all part of the development of the team. You can't get a title by just talking about it," said the 52-year-old.

"Spain had to wait a long time (to win the 2010 World Cup and Euro 2008).

"In the second half, we did everything we could to turn the game around. We played with real heart.

"Apart from the defeat, this tournament was very good and it's a learning process. Playing at this top level with these teams, there is not much between them.

"Just one moment can be decisive as to whether you win or lose.

"The team has really moved forward in the last two years, we've caught up with lots of nations who were ahead of us and now we're at the same level as the really top teams.

"We didn't make it today, but there will be a chance in the future.

"The energy was there, we wanted to get to the final and we always felt that, but today, in the first half, we fell behind. That's why we're sitting here and that's why we are disappointed."

Loew said Italy deserved its victory and added the Italians have a chance against defending champion Spain in Sunday's final in Kiev.

"Spain weren't quite as strong in the last few games as they were in 2010," said Loew. "I think it will be totally open, the Italians will have the confidence gained from winning against England and now against us."

Agence France-Presse in Warsaw