In what proved another pulsating, high quality encounter City made a superb start, subduing the Anfield crowd and taking a deserved lead through John Stones’ close range finish after a superbly executed Kevin De Bruyne corner.
However, Liverpool hit back after the break, winning a 46th minute penalty after Ederson brought down Darwin Nunez in the box.
Stefan Ortega was forced to come on to replace Ederson who was injured in making the challenge and Alexis MacAllister converted the subsequent spot kick.
Both sides then had chances to win the game with City substitute Jeremy Doku seeing a late shot from inside the box strike the foot of the post.
The result left Arsenal on top on 64 points with Liverpool also on 64 but with the Gunners enjoying a better goal difference and a game in hand.
City are third on 63 points but also with a crucial match advantage on the leaders.
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