Serena started to unravel early in the second set.
“I just couldn’t keep a ball in play,” she said. “Everything was off.”
Venus Williams won on her fifth match point, and is 3-0 in round-robin play of a tournament that features the top eight players. Serena Williams dropped to 1-1, but can still advance to the semifinals if she defeats Elena Dementieva on Friday.
The sisters are 9-9 in career matchups. Serena defeated Venus in the U.S. Open quarterfinals en route to the title this year, and Venus won their title match at Wimbledon.
Venus stayed composed throughout the match, using her powerful serve to frustrate Serena, but refrained from celebrating after winning.
“It wasn’t the happiest match,” Venus said. “The best part is that she still has an opportunity to qualify.”
Both sisters played their trademark power tennis in the first set before the rallies turned shorter in the second, with Serena growing increasingly frustrated by her errors.
Venus earned two set points in the second when Serena double-faulted, and converted the second with a crosscourt backhand that passed her younger sister at the net.
“I didn’t even look like a top-eight player today. Maybe top 600, in the juniors,” said Serena, who has won nine majors and is making her fifth appearance at the season-ending championships. She won the event in 2001.
Earlier Thursday, top-ranked Jelena Jankovic defeated Svetlana Kuznetsova 7-6 (6), 6-4 to secure a semifinal spot.
The seventh-ranked Kuznetsova saved two set points in the tiebreaker before hitting a forehand into the net to drop the first set. Jankovic called for a trainer early in the second set for a back injury before recovering to win her second round-robin match.
“I hope I will be OK” for the semifinals, Jankovic said.
Kuznetsova has one more round-robin match to play, but can’t advance because she’s lost twice.
Eight players are divided into two groups, with the top two in each group advancing to the elimination stage.
Dinara Safina played Dementieva later Thursday.
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