Madrid, Spain -- (Sports Network) - Wimbledon, French Open and Olympic champion Rafael Nadal and U.S. Open runner-up Andy Murray were among Tuesday's second- round winners at the $2.78 million Madrid Masters -- the eighth of nine ATP Masters Series events this year.

The world No. 1 Nadal was tested in a 7-5, 3-6, 6-3 victory over rapidly- rising Latvian Ernests Gulbis on the indoor hardcourt at Madrid Arena. Nadal prevailed in 2 hours, 21 minutes with the help of two service breaks, compared to only one for Gulbis, who ripped 15 aces, but also piled up eight double faults en route to defeat.

The Spanish hero Nadal, who titled here back in 2005, will face 15th-seeded Frenchman Richard Gasquet in the third round on Thursday.

The fourth-seeded Murray was leading lucky-loser Simone Bolelli 6-0, 2-1 when the Italian retired from the bout, citing a shoulder injury. Murray's third- round opponent will be dangerous Croat Marin Cilic.

Second-round upsets came when Frenchman Gilles Simon took out 11th-seeded American James Blake 3-6, 6-1, 6-4 and Cilic subdued 13th-seeded Spanish crowd favorite Fernando Verdasco 6-2, 6-3.

The aforementioned Gasquet avoided an upset by outlasting big-serving American Mardy Fish 6-7 (3-7), 6-4, 6-3.

In some first-round action on Day 3, France's Gale Monfils, last week's runner-up in Vienna, dismissed Italian wild card Fabio Fognini 6-2, 6-4; German Philipp Kohlschreiber clipped Spanish favorite Carlos Moya 6-2, 6-2; Romanian qualifier Victor Hanescu overcame Russian Dmitry Tursunov 4-6, 6-2, 6-3; last week's Stockholm runner-up Robin Soderling erased French qualifier Florent Serra 6-3, 6-4; and American qualifier Robby Ginepri topped France's Michael Llodra 6-4, 6-4. Hanescu will face Australian Open champion Novak Djokovic in the second round on Wednesday, while Ginepri will battle Russian star Nikolay Davydenko.

Additional first-round wins came for Finn Jarkko Nieminen, Spaniard Feliciano Lopez and Spanish qualifier Marcel Granollers.

Gritty Argentine David Nalbandian upset Swiss superstar Roger Federer, the 2006 champion here, in last year's Madrid finale. Nalbandian was last week's titlist in Stockholm.

The 2008 Madrid titlist will collect $490,000.