Russia's unseeded Elena Bovina swept to a surprise 6-3 6-2 victory over Venus Williams at the Kremlin Cup in Moscow.
Williams was playing for the first time since the US Open, where Svetlana Kuznetsova beat Russian compatriot Elena Dementieva to win the title.
On Friday, Dementieva gained revenge with a 6-1 6-3 victory over Kuznetsova.
Second seed Lindsay Davenport eased past Francesca Schiavone 6-4 6-1 and third seed Anastasia Myskina recovered to beat Vera Zvonareva 4-6 6-0 7-5.
Former world number one Williams was not impressed by her performance.
"My serve wasn't there the way I wanted it to be today," she said.
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