Italian picks up two bookings as City went down to 10 men in second half while Liverpool were unable to capitalize on long periods of pressure following a first half equalizer
City took the lead through Vincent Kompany in the first half as the captain headed in from a corner, but were quickly pegged back by a deflected Charlie Adam shot.
Liverpool was on the front foot for much of the second half, with Joe Hart on top form to deny Luis Suarez, Andy Carroll and others after substitute Mario Balotelli was sent off after picking up two bookings in his 18 minutes on the pitch.
The result means City retain its five-point lead that it came into the weekend with, but could not capitalize on Manchester United's dropped points on Saturday, while Liverpool move up into sixth position in the league.
The match started at a frenetic pace in the opening 10 minutes, though little came in the way of true chances. Yaya Toure came closest to opening the scoring when, following some head tennis in the box after a corner, he fired well over on the half volley.
City looked to be the more likely to open the scoring, keeping a high defensive line and pressing well inside the Liverpool half. The hosts did look dangerous, however, through the counter attacking capabilities of Dirk Kuyt, Luis Suarez and Downing.
The first real moment of danger came when Jose Enrique attempted a back-pass to Pepe Reina that was seriously lacking in power.
The pass was pounced on by Sergio Aguero, but as he got to the ball he was met with a sliding tackle from Reina. The ball did hit the ‘keeper’s hand, but only after it had rebounded off Aguero, and he certainly couldn not have done anything to get out of the way.
While there hadn’t been too much in the way of true efforts on goal, City was having more than its fair share of corners, and one of these led to the opening goal. It was a fiercely whipped in corner from one of the form players in the Premier League, David Silva.
Vincent Kompany beat both of his markers to the ball, and somehow managed to find the back of the net after the ball cannoned of his shoulder and into the far corner.
But it only took Liverpool a matter of seconds to restore the parity. Charlie Adam found himself some way out in plenty of space, and with nothing else really on, he elected for a shot which he had dragged quite badly.
It was heading well wide until the intervention of Joleon Lescott, who unwittingly deflected the ball past Joe Hart and into the back of the net.
After he doubled back, he found the on-rushing Adam just inside the penalty, but he placed his right-footed shot too close to Hart, who managed to save the ball despite heading in the other direction.
The match up until this point had been tense, but was somewhat lacking in intensity and chances, but after the equalizer, the game really seemed to have the potential to become an epic.
15 minutes into the second half the only thing standing between City and a second goal was Enrique, who did well to cut out Clichy's cross at the back post with Aguero lurking.
Reina had to be on his toes moments later as Aguero looked to get on the end of a through ball. The Spanish 'keeper misjudged the flight of the ball and was forced to follow Aguero and dive in to tackle, but luckily for him he won the ball.
With three quarters of the game gone, Hart was called into action again, pushing over a Downing volley which had been struck into the floor but was heading into the top corner.
The Reds again came close minutes later as Adam whipped in a devilish free-kick that again caused a game of pinball in the box, with the ball bouncing into the thankful arms of Joe Hart. And seconds later Downing shinned a volley across the face of goal with Kuyt agonisingly close to turning the ball in as he slid in at the far post.
The home side was certainly looking the most likely to find a winner as the match drew towards the final stages, with the home crowd willing the ball into the net. And with the match finely poised as it was, Mancini would have been hoping that his players would keep a cool head.
But Balotelli received his marching orders in the 83rd minute, having only been on the pitch for 18 of those. The Italian picked up two quick bookings, one for a needless tug on Glen Johnson, and a second for an elbow to Martin Skrtel's head.
Perhaps Balotelli could claim that his reputation preceded him, but after making such a silly challenge on Johnson only minutes before, the second was careless and he did catch the defender with a leading elbow.
In the closing stages Hart made a good stop from Suarez at his near-post before City broke through substitute Edin Dzeko. Dzeko found an unmarked Silva in the centre, but the Spaniard was tied up by his countryman Reina with Skrtel getting back on the line to clear the eventual shot.
In the last action of the match, Hart was at full stretch to fabulously deny Carroll from a header that surely would have earned the hosts all three points, but the visitors maintained their unbeaten start to the season.Follow GOAL.COM USA on