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Rooney needs to get a bit further forward in this half, he's playing too deep.
Wilshere's first touch is to... miss the ball, so technically his first touch is the next one he gets. With his second he chips a ball over the top for Alli but the ball is cleared away. Rooney tries to chip one into the box but again the defence holds steady and gets rid.
Iceland start the second half. WHAT WILL HAPPEN?!
Jack Wilshere set to come on. That'll make a difference. If there's one thing England need, it's someone who gives the ball away in the final third, breaks all of his ankles and leaves space behind for the counter-attack.
Or maybe he'll be great and force opportunities for England to shoot from. If they can try efforts from closer than 25 yards out they might have better luck.
Eric Dier is the player to go off, by the way.
The hubris to talk about whether Hart will be dropped for the quarter-final when England are losing at half time.
So much this. Why can't pundits just enjoy what's happening at the time? England are losing just now, in a massive game against tough opposition, but talk has turned to who will play in the next match. These people are worse than the ones who record a gig on an iPad.
Incredibly, mood still quite positive here in the Nice fan zone. I have lost my discipline and become extremely angry. Not proud to admit I mislaid my rag at that aimless twirly backheel volley to thin air by Dele Alli and said a rude word at excessive volume. I also may have executed the universal "throwing nothing" gesture of football supporting fury. Crumbs.
The thing is, people should have seen this coming. Iceland are really good and deserve to be ahead here.
A lot of pundits were on about Iceland being a "throwback to the 80s, a real set piece team" before this match kicked-off but I'll tell you what, England are far more deserved of that title.
Sterling has been exactly as useful up front for England as he has been all tournament - i.e not at all. Sturridge is mince when outside the box and needs to play through the middle, but has been forced out wide as a winger. Kane is taking freekicks and isn't getting the ball in the middle - and even if he did he'd have to lay it back to a midfielder since England don't have any actual wingers.
Walker and Rose are the wingers but both are defenders. They are not Ryan Giggs and Figo.
What is Roy playing at? Is it his fault? Are Iceland just really good? I can't find the emoji buttons on this keyboard to convey my feelings.
Booing greets the players at half time as England walk off the pitch at half time a goal down to Iceland.
Walker gets down the right, sends in his cross to the edge of the box and Wayne Rooney pulls the trigger on a volley. It comes off his shin and bobbles wide.
It'll be interesting to see at what point tonight Roy Hodgson decides that the team which wasn't good enough to beat the worst Russian side I've ever seen and struggled to beat Wales, might not be the one to successfully negotiate its way through the Euro 2016 knock-out stages.
England still struggling to create anything. Wayne Rooney is in control of the tempo of their play but therein lies the problem - he's slowing everything down.
Daniel Sturridge overhits a pass to Dele Alli in the middle and the keeper gathers.
Are Iceland in the EU?
It's nearly half-time and Iceland are still winning, by the way.
Sigurdsson has a shot from 35 yards now but Hart manages to catch this one. Wayne Rooney has just had a shot sail over the bar. Why can't England shoot on target?!
Danny Rose wins a freekick from Sigurdsson, Sigurdsson trips him up as he tries to take it quickly and earns a yellow card for doing so.
Smalling heads over the bar from two yards from Kane's freekick.
Hodgson said last week that England "will make someone pay soon". Looking forward to World Cup qualifying.
England are still the most likely winners of this game, but it's lamentable that they're in this situation. They were bamboozled by a long throw and then watched passively as Kolbeinn Sigthorsson scored Iceland's second, with Joe Hart posting his second goalkeeping error of the tournament.
Skulason has a shot from 35 yards which hits the ground and picks up speed, zipping past Joe Hart's far post. The keeper was at full stretch trying to stop that one. Iceland look comfortable.
Dele Alli goes down in the area and it's a definite dive for me, Clive. He's looking for the contact, which doesn't come, and the referee waves play on. England being forced to pass back to their defenders at the moment as there are zero gaps in this Iceland wall of defence.
Savarsson puts in challenge of the tournament and absolutely crunches Sterling by the corner flag. What a tackle!
Dier comes forward, plays a pass out wide to Rose, whose first touch is awful and he has to overhit a volley pass to Sterling to chase. Sterling races after the ball, is followed all the way to the corner flag and then gives away a goal kick.
There's a good counter-attack on now though and Kane picks the ball up deep, finds Sterling wide on the right. He stops the ball on the byline, turns and chips back to Kane at the far post. He takes the volley first time... and the keeper pushes it over! Great effort!
Various players try pinging efforts at goal afterwards but Iceland block and Rooney's cross eventually goes out for a goal kick.
England's movement off the ball is woeful at times. Eric Dier gets the ball in the middle of the park and has to wait a good 30 seconds before ANYONE else on the team moves into space for the pass. England are playing long balls over the top for the full-backs to chase already.
That throw goes straight into the box, Joe Hart tries to deal with it, goes down while trying to punch the ball away and the Iceland midfielder boots his shot way over the bar. It wouldn't have counted anyway as the referee gives Hart a freekick for a push.
Gylfi Sigurdsson gets down the right, slows down and looks up to the box, swings in a fantastic long range, curling ball from 40 yards and Smalling has to clear. Aron Gunnarsson comes across to take the throw and you can feel the tension in the air among the England defenders.
The fans are in raptures! Iceland work the ball in a great passing move and a few touches later, Kolbeinn Sighthorsson is on the edge of the box! He shoots, there's no power in it but it's headed for the bottom corner. Joe Hart gets down but the ball rolls through his hand! It trickles into the back of the net!!!
Delighted to report that the Icelandic national anthem went un-booed here in the Nice fan zone, populated almost exclusively by England fans. It's a totally different mood than in Marseille and Lens for the first two group games. People are similarly drunk but far less frightening. No imminent threat of getting my head kicked in when I open conversations with "Hello, I'm a journalist". It's hard not to be happy when you're in Nice. Mood still buoyant despite equaliser. Three Lions being sung. Not sure if 96 or 98 version, they never seem to make it to the verse.
It's a good corner from Rooney and the keeper's struggling a bit. The ball bounces around the area and drops just outside for Dele Alli who unleashes an absolute rocket of a shot. It fizzes over the bar, leaving a trail of flames behind it. Woosh! England are dominating possession here.
Kane works space 25 yards out and takes a powerful effort which rises over the bar again. England going for the long shot routine today - it's not a bad idea as it forces Iceland defenders to step out of their trenches and close them down. Plus, Kane, Alli and Rooney can all hit them from distance.
Cahill hits an absolutely wonderful 60 yard cross-field pass to Walker, who has to sprint to keep it in play and does so. Rooney comes short to help and finds Kane, who wins another corner.
England are playing some nice football here but Iceland have already put up The Blue Wall and the forward players are running out of ideas quickly. Kane wins a corner but nothing comes from it.
Right so some stuff has happened since this game started. I'll hopefully get caught up with it at some point soon. England are enjoying possession, Iceland are enjoying the game.
ICELAND ARE STRAIGHT BACK IN IT!!! The throw-in is hurled into the area, the ball is knocked on and Ragnar Sigurdsson slots past the keeper!
Rooney scores! Bottom left, hard and low. England lead in the opening minutes.
PENALTY! Raheem Sterling runs through, the ball comes over the top and the keeper takes him out. Rooney to take the penalty.
England attack from the start but Rooney's long pass goes straight out for a throw and Iceland deal with the next couple of surges forwards relatively easily, clearing their lines. Rose and Walker are already playing high up the pitch.
Sturridge gets his first shot on goal away, shooting wide from 30 yards, and then both teams play head tennis in the centre-circle before Sterling has a shot blocked in the box. Iceland get men back, win the ball and try to play in Bjarnason down the left.
And we're off! England get us started!
Not a rousing one, is it? Iceland's anthem has more of a Sunday morning, making pancakes kinda vibe.
England's national anthem is fairly standard.
So. Now. Here we are. Knock-out competition involving England - can they break down the mighty Iceland? We're about to find out! Here comes kick-off!
England's goalkeeper seems to like shouting encouraging instructions in the tunnel and he's at it again as both teams head out onto the pitch. The stadium isn't full tonight but that may very well be because it's so far from the city centre. Apparently it's an absolute nightmare getting there.
Here come the anthems. Who will win?!
We need width in our team playing against Iceland, they're very compact. They group up in the midfield so we want to stretch the defence and Raheem is the right man for that.
We want to move the ball quickly, which we've been doing and we want to make certain we stop their counter-attacks. We're more focused on width than we have been in other games.
We're in a for a difficult match. We're ready for it and we think we have the capabilities and abilities to win the game.
I think that you're right about Sturridge and pretty much the same rationale applies to young Master Rashford when England get desperate in the second half. Why isn't Rooney deployed as an outright libero? Cahill and Smalling always look like they need the cover, even against very average opponents. Still, it's all academic, the lead-limbed Spain who just got brushed aside by Italy would slaughter England FC.
"The pound sterling may not be at its strongest, but Roy Hodgson will be hoping that Raheem Sterling is at his. Can he be the man to help end England's 50 years of hurt? We're about to find out"
And then Glenn Hoddle describes literally what he sees. Why not join in? Send me your Clive Tyldesleys. We have about 15 minutes. joseph.bull@telegraph.co.uk is my email address. Hurry!
I haven't met a single English person who thinks England will actually win the tournament but I get the feeling anything less than a semi-final would be really disappointing. It's this strange paradox of not expecting anything good to happen, but being absolutely furious when that's exactly what happens.
The giant striker says he's really nervous because England keep struggling against teams like Algeria, Romania and other ias that many think will just roll over once the three lions come to town. Iceland are not to be underestimated - "Doing a Leicester" is a phrase that you'll hear for many years when discussing the underdog and Iceland are just as well drilled as Leicester.
All it takes is England to make one mistake and Iceland to take advantage of it... and then the pressure will build and build and make scoring that much harder.
Made a note in the Austria game that Iceland right-back is average. If Raheem Sterling can't trouble Bikir Saervarsson he shouldn't be here.
We all know that Roy Hodgson prefers a 4-3-3 and he's gone for exactly the same thing tonight. Both Sturridge and Sterling prefer to make runs through the middle, which means Kyle Walker and Danny Rose will be busy down those flanks creating width tonight.
Iceland will be looking to take advantage of any change in possession in the centre of the pitch and turn it into a counter-attack. Beware Iceland, Roy.
False nines and fluid 4-3-3s might be the in thing right now but Iceland have gone retro, rummaged around some charity shops and made the 4-4-2 fashionable with some subtle adjustments.
There's nothing wrong with a playing a 4-4-2 formation - it's just that after the days of everyone playing it, most have figured out how to beat it. If two teams are playing the system, the game has a tendency to turn into kick and rush and players like Dennis Bergkamp, Gianfranco Zola, Teddy Sheringham and Eric Cantona used to thrive in the Premier League by dropping into the space between the midfield and defence as a result.
Atletico Madrid and Leicester have proven this season that you don't need to have the majority of possession, the very best players nor do you absolutely have to play Total Football to win. Iceland only conceded six goals in qualification by sitting deep. Holland, in the same group, conceded 14 and will watch Euro 2016 at home.
Attacking teams simply can't do that much damage if they don't get closer than 30 yards from goal and all the defending team needs is a striker (or two) to take a chance at the other end and they're in business. Greece did it in 2004, Iceland can do it in 2016.
That's not to say Iceland don't attack - they scored 17 goals on route to France, a far better return than another rigid team, Wales, who conceded four but scored just 11.
I'm normally awful at Fantasy Football but have been playing this year and doing... sort of alright. One of the reasons might be that I haven't selected any English players. Gylfi Sigurdsson for me please, Clive.
Players from England and Iceland have so far produced just 218 Telegraph Fantasy Football points between them, which explains why their players are pretty unpopular with fantasy managers.
Iceland's leading player is Jon Dadi Bodvarsson with 14 points while four England players (Vardy, Hart, Smalling and Dier) have managed 11.
Dele Alli remains England's most-selected player in 11.1% of teams while Gyfi Sigurdsson is Iceland's most-wanted in 3.8% of teams.
I wrote a piece a short while ago on why Daniel Sturridge must start for England, and though he didn't score against Slovakia, I stand by it!
What do you think then? Should Adam Lallana have kept his place? Roy Hodgson clearly sees something special in Raheem Sterling (and to be fair, he's been tipped as a world star by football scouts since he was about 12, according to Mike Calvin's brilliant "The Nowhere Men" book) but as we know, he's not been fantastic. If a couple of things start to go his way, he might be England's best player tonight.
Adam Lallana works hard but his end product just hasn't been good enough. Sturridge had to play tonight - not only does he look confident, but he's one of the only players England have who can make a difference.
Can England win Euro 2016... on Football Manager?
Alistair Tweedale has been playing Football Manager for his job these last couple of weeks. Find out here if he is able to mastermind an England tournament win. At the moment he's in the last 16, the same as real life England, and has to play Northern Ireland.
Look! England fans being friendly to opposition fans. Imagine that.
Meanwhile, somewhere else in France, Italy have kicked off against Spain. If you'd like to follow the action in that one you can read our liveblog. It's the final that came too soon.
Frederic Martinez, president of the shopping centre, later said the discarded bag contained "tools used for routine maintenance". These included a saw, aerosol cans, and the two small gas cylinders. He denied earlier reports that a detonator was found in the bag. "Everybody was evactuated safely, and then we reopened for business at 3pm," said Mr Martinez.
However, local reports quoted police sources claiming disposal experts were called to diffuse a "makeshift device". Supporters of both sides were among 2000 people evacuated from the Carrefour Lingostiere centre, which is less than two miles away from the Nice Stadium, in the southern French city. "Two gas cylinders and a detonator were found close to the entrance of the centre," said a local police source earlier. "These kind of makeshift devices have been used in terrorist attacks in the past. "Police organised an evacuation of the centre, before bomb disposal experts took action to make the area safe."
A cashier working at the centre raised the alarm shortly before 1pm , alerting security guards who called the police.
Euro 2016 is on the highest security alert following threats by Islamic State to target the event.
They have pledged to bring death and destruction to those taking part, leading to police and soldiers flooding all venues.
There was a controlled explosion at Nice Airport just two days ago, following the discovery of a suspicious package.
Since then, thousands of fans from England and Iceland have arrived in the seaside city, for the 9pm kick off.
The Stade de France in Paris was targeted by Isis last November, during a night of terror which saw 130 people killed.
Suicide bombers wielding explosive belts and Kalashnikovs created most of the carnage, and there were bomb scares earlier in the day.
The shopping centre has been reopened.
Afternoon all, first things first: Here's literally everything you need to know about tonight's match.
When is the match being played?
If England - as they were expected to do - would have topped Group B, then their last 16 match would have taken place on Saturday June 25.
As it is, England finished runners up to eventual group winners Wales meaning they will now play their first knockout match of Euro 2016 on Monday June 27.
What stadium will it be played in?
The tie will be the last round of 16 games to be played and will take place in Nice at the Allianz Riviera.
Also known as the Grand Stade de Nice, the stadium was newly built for the start of Euro 2016.
The ground is one of the smaller venues to host a tournament fixture with a capacity of just 35,000 people.
The game will start at 8pm UK time (that's 9pm in France).