The top-seeded world number one who claimed his only trophy in the capital in 2005, rallied past upcoming Latvian Ernests Gulbis 7-5, 3-6, 6-3 riding a late break in the final set to victory.

Nadal, holder of eight titles this season including Paris, Wimbledon and the Olympics, has stalled in the quarter-final at the last two Madrid editions.

He was playing for the first time since leading Spain into the Davis Cup final against Argentina three weeks ago. The Spanish hero failed to convert on his first match point against the 20-year-old Gulbis, but reached the third round on his second opportunity.

"It was a very tough match and an important one to win," said the relieved Nadal. "Gulbis is young with a great future ahead of him. "He fought back well in the second set, winning the important games. I pulled out my best game when I had to. It was tough to attack him, and this was my first match in a few weeks to I have things to improve."

Nadal will play on Thursday against French 15th seed Richard Gasquet, a winner over Mardy Fish 6-7 (3/7), 6-4, 6-3. Scot Andy Murray stormed to the third round as good fortune ran out for Italian lucky loser Simone Bolelli 6-0, 2-1 retired.

The Italian, who earned a place in the draw when Marat Safin withdrew with injury, threw in the towel after 47 minutes after treatment on an upper arm and shoulder.

"I was really happy with how I served and moved," said Murray, who next faces Croatian Marin Cilic, who put out 13th-seeded Spaniard Fernando Verdasco 6-2, 6-3. "There was a lot for me to take advantage of. He stopped for a shoulder problem, but he seemed to be hitting his serve fine to me."

Cilic, 20 and Murray, a year older, have never played on the ATP Tour though they met in Davis Cup two years ago and as juniors in Paris, standing 1-1.

"He's playing well on these courts," said Murray. "He's done well in big matches this year. It will be a tough match, I'll have to play very well to win. He's a danger here with the ball flying at altitude."

American James Blake maintained his dismal, winless record in Madrid with the frustrated 11th seed crashing out to on-form Frenchman Gilles Simon 3-6, 6-1, 6-4. Simon, winner of two titles since July, pounced on 46 unforced errors to hand Blake his fifth loss in the Spanish capital and put the American in grave danger of dropping in the race for the season-ending Masters Cup in Shanghai.

The 16th-ranked Simon is riding a wave of form after winning Indianapolis and Bucharest in recent months. Blake's potential for a spot in China is endangered if Swiss Stan Wawrinka can do well this week while standing tenth in the points race one spot behind the fading Blake.

In first-round matches, Germany's Philip Kohlschreiber stopped Spanish hero Carlos Moya 6-2, 6-2 while Marcel Granollers of Spain beat Frenchman Paul-Henri Mathieu 6-4, 6-4.

Weekend Vienna finalist Gael Monfils continued his indoor success as he beat Italian wild card Fabio Fognini 6-2, 6-4. Stockholm semi-finalist Jarkko Nieminen reversed a run of three losses against Mikhail Youzhny, ousting the Russian 7-5, 3-6, 6-2.