MOSCOW (REUTERS) - Moscow erupted in street celebrations on Sunday (July 1) as the World Cup hosts booked a place in the quarter-finals, defeating Spain on penalties at Russia's flagship stadium.

Russia had already defied expectations by reaching the World Cup last 16 for the first time since the collapse of the Soviet Union, but after victory over Spain, fans now believe the tournament's lowest-ranked team could go all the way.

"This is unreal, no one thought it could happen. And now people are starting to believe," said Yulia Gordinskaya who had Russian flags painted on both cheeks.

"Of course we can win the World Cup! We just need a bit of luck," she said.

On a central Moscow square, a street orchestra erupted in a rendition of the Russian anthem as passing cars tooted their horns and men staggered out of a nearby bar waving Russian flags.

"This is a great victory for us, for the whole country, the soul of the country," Mikhail Sitner, 34, from Moscow, said.

"Honestly, before the tournament I had very low expectations, everyone was just hoping to God that we would get out of the group stage. And then we drew Spain, I thought everything would end.

"This morning I was very nervous, but now it is time to celebrate."

Sergei Galunenko, 51, a construction worker, went further: "This is the birth of our national team, that's what this victory means for us."