Spain captain Raul Gonzalez missed a penalty in the 25th minute of a game which was a disappointment for David Beckham and Michael Owen the two Real Madrid players who were representing England at their club ground. Beckham played for an hour while Owen played the entire 90 minutes.
"It was too competitive for a friendly game England coach Sven-Goran Eriksson told BBC Five Live. "The second half was a little bit better but in the first half I'm sorry to say we lost our heads. When we do that it's difficult to come back in football."
England left back Ashley Cole and substitute Shaun Wright-Phillips both of whom are black were subjected to racial taunts from some spectators nearly every time they touched the ball.
"It was very bad to hear. When you hear people doing it at players because of the color of their skin I am sorry to hear it _ but it happens today Eriksson said. "It is always bad and you always have to take distance from that. I'm sure the FA will continue to fight this. That's good -- and it's very important for football the world for everything."
Spain coach Luis Aragones refused to comment on the racial taunting of the England players.
"My conscience is clear. I'm only interested in football and in this victory Aragones said.
The match was overshadowed by racial accusations. Aragones accused England of a racist colonial past while the English team said Spanish fans racially taunted its black players in an under-21 friendly on Tuesday.
The game was Spain's 500th international and the 20th meeting between the two countries. The victory was Spain's sixth over the English while England has won 11.
"The entire team played a good game. We kept possession of the ball which the boss wanted. It's the philosophy of the team midfielder Xavi Hernandez told Spanish TV.
Spain dominated the first half with England failing to get a shot on target.
Del Horno took advantage of a bouncing ball to head home from Xavi's corner. The goal was the Athletic Bilbao left back's first for the national team.
Spain earned a penalty when Greek referee George Kasnaferis whistled England goalkeeper Paul Robinson for bringing down Raul although TV replays showed that Robinson had gotten to the ball first.
Robinson recovered to block Raul's attempt diving to his left to thwart the chance.
Moments later fighting briefly broke out in the top tier before police intervened.
Tempers flared on the field as well. Wayne Rooney received a yellow card in the 39th minute for pushing Iker Casillas off the field and into a section of photographers as the goalkeeper shielded the ball. Rooney's collision with defender Carlos Marchena only a minute later was enough to persuade manager Sven-Goran Eriksson to replace him with Alan Smith.
Cole picked up a yellow card soon after for a heavy tackle on Michel Salgado which provoked even louder racist taunts from the crowd and Lampard brought down forward Jose Antonio Reyes as the first half ended.
The tone of the match appeared to change with the start of the second half and Eriksson and Aragones making six changes each.
Beckham who only returned Sunday after a month's absence with cracked ribs in England's last game was replaced after an hour by Wright-Phillips. The Manchester City forward immediately was taunted as he entered the field by fans making monkey noises.
With Owen finding little space Smith looked to be England's liveliest forward and in a rare attack in the 70th minute the Manchester United player had a penalty appeal rejected when he appeared to be held by substitute Pablo Ibanez.
Spain substitute Miguel Angel Angulo making his international debut blazed a shot over the bar in the 78th minute. The shot came just before Cole was replaced by striker Jermain Defoe as Eriksson selected a three-man England attack for the remainder of the game.
England wore black armbands in memory of former Liverpool and England captain Emlyn Hughes who died last week.
Spain: Iker Casillas; Michel Salgado Carlos Marchena (Pablo Ibanez 46) Juanito Gutierrez Aitor Del Horno; Joaquin Sanchez (Enrique Romero 79) Xabi Alonso (Pablo Orbaiz 69) Xavi Hernandez Jose Antonio Reyes (Miguel Angel Angulo 58); Fernando Torres (Albert Luque 46) Raul Gonzalez (Jose Maria "Guti" Gutierrez 46).
England: Paul Robinson; Gary Neville Rio Ferdinand (Jamie Carragher 62) John Terry (Matthew Upson 65) Ashley Cole (Jermain Defoe 78); David Beckham (Shaun Wright-Phillips 61) Nicky Butt Frank Lampard (Jermaine Jenas 61) Wayne Bridge; Wayne Rooney (Alan Smith 43) Michael Owen.