Both the Manchester clubs finally got their first wins of the Champions League campaign on Tuesday, while Real Madrid trounced Lyon and Inter beat Lille.
Manchester United beat Romania minnows Otelul Galati 2-0 and City edged Villarreal 2-1.
However, both were not pretty affairs, United relying on two Wayne Rooney second-half penalties - making him the highest ever scoring Englishman in the competition with 26 goals - in a match where both sides ended with 10 men.
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United, though, still trail Benfica in the table, the impressive Portuguese outfit maintaining their unbeaten record in all competitions with a 2-0 win away at Basel.
City's win was harsh on their resilient Spanish opponents Villarreal as a goal in time added-on by Sergio Aguero gave them the three points and all but ended the losers hopes of progressing with a third successive defeat.
City got another boost as group leaders Bayern Munich drew 1-1 away at second-placed Napoli - a game more notable for Manuel Neuer letting in his first goal in 1147 minutes of action.
It took one of his own team-mate Holger Badstuber's boot to do so.
Real Madrid's perfect start to this season's Champions League continued as they steamrollered French side Lyon 4-0 to make it three wins from three matches.
The meringues have not won Europe's premier club competition since 2002 and are desperate to dislodge bitter rivals Barcelona from their perch as European champions.
Goals from former Lyon star Karim Benzema, Sami Khedira, an own goal by Hugo Lloris and a fourth from Sergi Ramos rounded off a great night for them and a bad night for French clubs was compounded by champions Lille's 1-0 home defeat by Inter Milan.
A first-half goal by Gian Paolo Pazzini was enough to give the 2010 Champions League winners victory in their 100th match in the competition and a much-needed win for Claudio Ranieri and his players, who are struggling in Serie A.
While Lille will do well to compete for a knockout stage spot, Inter face a battle with CSKA Moscow and Trabzonspor, the Russian outfit impressing with a 3-0 home victory over the Turkish side, who stunned Inter in their opening match at the San Siro.
A brace from impressive Ivory Coast international striker Seidou Doumbia and one from Latvian substitute Aleksandrs Cauna, once of modest English side Watford, re-energised the hosts campaign.
"It was much tougher to win today than it may appear looking at the scoreline," CSKA manager Leonid Slutsky said.
"But we played confidently keeping everything under control and didn't allow Trabzonspor to create serious threats except one
occasion at the start."
