Cesare Prandelli said the performance from Italy was “touching” despite the defeat on penalties to Spain.
Emanuele Giaccherini and Xavi hit the woodwork, but the Confederations Cup semi-final was goalless after 120 minutes and decided 7-6 in a shoot-out.
“When you reach penalties, anything can happen. We had a great performance and were in it from start to finish, creating many scoring opportunities,” Prandelli told Rai Sport.
“Spain are ahead of us because they have worked on these concepts for many years, while we are still seeking our path. In terms of character, determination and tactics, we are improving.
“These atmospheric conditions were absurd, as it was impossible to have energy left after 120 minutes. The lads were truly touching in the way they fought today.
“Of course we dedicate this performance to Stefano Borgonovo and his family, who faced his fate with great courage.”
Italy wore black armbands today in memory of Borgonovo, who died this afternoon aged 49 after suffering from ALS.