The 21-year-old Spaniard, in seek for his first ever title at the year-ending classic, was not hardly tested by a horribly out-of-form Novak Djokovic before taking a convincing 6-4, 6-4 win for a 2-1 group record.

Ferrer, four years Nadal's senior and a close friend of the world number two, then came onto the court to blitz past eighth-seeded Gasquet 6-1, 6-1 in only one hour, snapping the Frenchman's last hope of advancing.

His win guaranteed Nadal to join him in the knockout stages from the Gold Group.

American Andy Roddick had become the first man to reach the semifinals the previous evening, while world number one Roger Federer is hot favorite to claim the final spot in Friday's Red Group action.

Fernando Gonzalez is also capable of advancing from the group if he beats Nikolay Davydenko and if Roddick eliminates Federer by beating the three-time champion.

Sixth-seeded Ferrer seemed to be in supreme shape as he improved his Shanghai record to 3-0 in his debut, including upsetting world number three Djokovic in the opening match and number two Nadal in the second match.

"I didn't expect to reach the semifinals but I'm playing with a lot of confidence and I'm improving every match," Ferrer said.

"To win the Masters is a dream. I'm just thinking about the next match. Getting to the semifinals is already a big achievement."

Ferrer, the revelation of the tournament, was broken in the opening game but was otherwise flawless in the first set, netting 12 winners against Gasquet as he broke three times before serving out.

Gasquet, wilting in the face of Ferrer's near-perfect tennis, held serve only once in the match as the Spaniard repeatedly pounded the lines, converting his first match point in just 59 minutes.

Djokovic, the popular Serbian who had early been eliminated from the semifinals after losing his first two matches in straight sets, meant to fight for his pride in his final match but still played below his best and went home from his first appearance at the year-end tournament without even winning a set.

"It wasn't my week, unfortunately I have to finish with the three losses, which is a bit disappointing," said Djokovic. "But of course, I don't want to think negatively. It's been an amazing year."

"I opened a new page. I try to think about something else right now. I need to get some good rest and then have soon the preparation for the next season.

"I'm going to go somewhere far, far away from everybody," added Djokovic, who won five titles and reached the U.S. Open final in 2007.

"I'm still just 20 years old and I'm number three in the world but I still need a little something more."

It was a better performance from Nadal, who won his opener against Gasquet but then suffered a shock defeat against Ferrer, one of a series of upsets in the 4.45 million U.S. dollars tournament featuring the world's top eight players.

"The important thing is win, so better if I win straight sets than three because my chance is a little bit more to go to the semifinals," said Nadal at the press conference.

"I am happy with my game today. I play very, very good match, the best match here and one of the best matches of the indoor season."

Top-ranked Federer lost his first round-robin match in six visits to the season finale and Djokovic and Davydenko, the world number three and four, have also been beaten by lower -ranked opposition.

In doubles' part, Paul Hanley of Australia/Kevin Ullyett of Zimbabwe and Martin Damm from Czech Republic/Leander Paes of India reached the knockout round from the doubles' Gold Group.