Williams, attempting to win her second consecutive tournament, was upset Thursday by No. 13 seed Justine Henin of Belgium, 6-1, 6-4, in the third round of the $1.185 million German Open tennis event.

"I was OK. She played very well," Williams said. "I think she has never played that well. Not every day is your day and this was one of these days."

Fresh off a dominating run to the title last week in Hamburg, Williams seemed poised to make it two in a row by soundly beating Slovakian qualifier Karina Habsudova, 6-3, 6-3, in her first match of the tournament Wednesday to run her string of consecutive match victories to 11.

But, in drawing Henin, she came up against an opponent she had never played before and the 18-year-old Belgian showed why she is considered one of the up-and-coming young stars on the WTA Tour.

Henin, who won both the Gold Coast and Canberra tournaments in Australia earlier this year, was coming off a strong showing at Hamburg last week where she took South Africa's Amanda Coetzer to three sets in the quarterfinals before losing.

"I played a very good match, very smart tactically," Henin said. "My plan to play a lot down the middle of the court and then attack at the right time and go to the net. I think before I had too much respect to beat the top players, but now I believe in myself more and when I go onto the court I believe I can beat anyone."

She is currently ranked a career-best No. 18 in the world and certain to climb higher.

"If she plays like that every day she should be No. 1," Williams said. "But that is it, you have to very consistent and very focused every single day. Sometimes you have days, you don't even know anymore that you are a professional."

Williams' loss removed a major barrier for No. 1 Martina Hingis of Switzerland. Hingis, who won this event in 1999, advanced to the quarterfinals with a methodical 6-3, 6-1 victory over Nathalie Dechy.

Hingis ran her career record against Dechy to 4-0 and, coupled with Williams' loss, virtually assured herself of retaining the world No. 1 ranking, which she has held since May 22, 2000.

No. 3 seed Jennifer Capriati of the United States, a winner at the claycourt event in South Carolina two weeks ago, and No. 4 Amelie Mauresmo of France also advanced. Capriati defeated No. 14 Sandrine Testud of France, 6-2, 7-6 (8-6) while Mauresmo turned back Patty Schnyder of Switzerland, 6-1, 4-6, 6-0,

Also reaching the quarterfinals were No. 5 seed Coetzer, No. 6 Conchita Martinez of Spain and No. 8 Arantxa Sanchez- Vicario of Spain. Coetzer defeated No. 17 Meghann Shaughnessy of the United States, 6-3, 7-6; Martinez beat Paola Suarez of Argentina, 7-6 (7-3), 6-0 and Sanchez-Vicario turned back Ludmila Cervanova of Slovakia, 6-3, 1-6, 6-3.

First prize is $175,000.