(Agencies)
Updated: 2007-11-14 10:30

SHANGHAI - World number two Rafael Nadal suffered the latest upset at the season-ending Tennis Masters Cup when he was beaten 4-6 6-4 6-3 by fellow Spaniard David Ferrer on Tuesday.

World number two Rafael Nadal of Spain waves to the crowd as he leaves the court after losing to compatriot David Ferrer in the 2007 Tennis Masters Cup in Shanghai. Ferrer won 4-6, 6-4,6-3. [Agencies]

Nadal was out-muscled by an inspired Ferrer, who improved his round-robin record to 2-0 and virtually assured himself a semi-final spot at the season-ending event.

Nadal, whose defeat came a day after world number one Roger Federer lost his opener in Shanghai, must now beat Serbia's Novak Djokovic in his final Gold Group match to advance.

"David is playing with unbelievable confidence and moving unbelievable -- just crazy," Nadal told reporters after losing to close friend Ferrer.

"No excuse. This is the toughest tournament of the year. Anything can happen. I didn't play a bad match. I played well. He played better."

Frenchman Richard Gasquet kept his hopes alive with a stylish 6-4 6-2 win over world number three Novak Djokovic to level his round-robin record to 1-1.

Djokovic became the first player to be eliminated from the showcase eight-man tournament.

Nadal produced some astonishing recovery shots, including a no-look drop shot, where he scrambled to reach a stop-volley and dinked the ball across Ferrer while looking down the line.

But after taking a first set punctuated by five breaks of serve, Nadal faltered late in the second, relentless pressure forcing him into a wild forehand to level the match.

Nadal, both knees taped after suffering from tendinitis coming into the tournament, had no answer to Ferrer's relentless pressure in the decider.

Ferrer, who beat Nadal in their previous meeting at this year's U.S. Open, closed out a marathon tussle after two hours and 40 minutes with a pummelling cross-court backhand.

"I was just happy to qualify for the Masters Cup," said Ferrer. "Rafa is the best player in Spain's history. This is just one match."

Gasquet's backhand, a shot Federer says is the best in the game, did most of the damage against Djokovic as the Frenchman breathed fresh life into his challenge.

"I had nothing to lose -- he's number three in the world," said Gasquet, who was the last player to qualify for the event.

"It's my first time in Shanghai but I was confident about playing Novak. I played a lot of amazing shots with my backhand. It was a perfect match."

Novak blamed his lack of spark on fatigue.

"I had amazing season but I think it was too long for me," said Djokovic, who won five titles in 2007 and reached the final of the U.S. Open. "I probably burned out a little bit."