By Sarah Young

LONDON (Reuters) - An Olympic clash between Spain and Croatia ended in controversy on the second day of the men's water polo tournament after the referee ruled a last gasp Spanish shot had not crossed the line, gifting Croatia a win to take them top of their group.

Amid raucous booing from the crowd, the Slovak referee, hassled by a vividly gesticulating Spanish coach, refused to change his decision after a television replay appeared to show a goal. The group A match ended 8-7 to Croatia.

Spain launched an appeal with swimming's governing body FINA on a dramatic morning which saw defending Olympic champions Hungary lose 11-10 to Montenegro - their second loss in a row.

"We're really upset because everyone saw it was a goal and I don't know why he (the referee) can't change the decision. The crowd saw that it was a goal, so I feel really bad about it," Spain's Felipe Perrone told reporters after Tuesday's match.

The Spanish were dominated by Croatia in the first half but came back strongly, capitalizing on a Croatian drop of pace, and cheering when they thought 41-year-old Ivan Perez's backshot had leveled the game with seconds to go.

"It was a really difficult match, they are physical, stronger than us. We knew that in the first two quarters they are one of the best teams in the world but they get tired and then we have options. If we had two minutes more we probably would have beaten them," Perrone said.

Hungary's Tamas Kasas, a three-time Olympic gold medalist, denied there was a crisis in Hungarian water polo after the defending champions lost to a fired-up Montenegrin team.

"I don't want to think about crisis. We lost against two of the best teams," said 36-year old Kasas, who returned to play for Hungary this year following three years out after Beijing.

"I came back to try to win. It will be my last Olympics, maybe my last match in water polo."

Hungary, the most successful team in Olympic water polo and gunning for a fourth consecutive gold, showed their quality in the second half but it was not enough to win the match.

They were beaten 14-10 by Serbia on Sunday, ending a 12-year, 17-game unbeaten run at the Olympics, and are under pressure to progress with three group games left against the other teams in Group B, the U.S., Romania and Britain.

In the men's event, 12 teams are split into two groups, with the top four from each group qualifying for the knockout stages.

(Reporting by Sarah Young, editing by Ed Osmond and Matt Falloon)