LONDON (Reuters) - An appearance in the stands from Prince William inspired Britain's unheralded water polo team to a brave early display against Serbia before the hot favorites for Olympic gold raced away to a 21-7 victory.

Britain, only competing because of host nation status and regarded as the tournament underdogs, even took the lead against the European champions and bronze medalists in Beijing before succumbing to Serbia's formidable attack.

Having played water polo at school, Prince William was not fazed by the rough and tumble of a sport likened to rugby in water and cheered enthusiastically along with almost 5,000 other fans in the packed venue on Tuesday.

Serbia's win propelled them to the top of Group B, which features the top four nations from the 2008 Games, while Britain languished at the bottom.

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

Serbia stamped their mark on the contest on Sunday after beating Hungary, the most successful water polo nation in Olympic history and going for their fourth successive gold, by 14 goals to 10.

(Reporting by Sarah Young, editing by Mark Meadows)