KEY POINTS:
Team New Zealand's defeat today in the latest race of their America's Cup yachting campaign might have come as a surprise to many, but not to those involved.
Underdogs Desafio Espanol beat Team NZ by one minute 14 seconds off Valencia in Spain to record the first win by a Spanish boat in the semifinal stages of a challengers' regatta.
The result cut Team NZ's lead in their best-of-nine Louis Vuitton Cup semifinal to 2-1 ahead of tomorrow's rest day.
After clearcut victories over the Spaniards in the opening two matches, the New Zealanders had seemed on target to whitewash opponents they had beaten in all nine previous meetings.
But trimmer Grant Loretz said Team NZ knew that booking a place in the final would not be so straightforward.
"We never went into this thinking we were going to win five-zip," he said.
"It was always on the cards that whoever we raced was going to take one, or two or whatever off us, so we just take each day as it comes."
Loretz said Desafio had to be given credit for "a brilliant race".
"The Spanish came out firing," he said.
"They were fighting for their lives and sailed the race of their lives."
Desafio got the upperhand early, when skipper Karol Jablonski's aggressive approach in the pre-start paid off with Team NZ being penalised for gybing too close.
While the boats came off the start line even, ESP97 had the favoured right-hand side and took advantage of a wind shift to build a lead of 14sec at the top mark.
NZL92 reduced the margin downwind to 8sec at the leeward gate.
But Desafio, who overnight made a measurement change which observers believed improved their boat's upwind speed, again controlled the right-hand side on the next beat.
ESP97's advantage ballooned to 44sec when it rounded the top mark for the last time accompanied by a volley of horn blasts from jubilant local fans on spectator boats.
On the run home, NZL92 couldn't get close enough to attack and the contest was already won and lost before the penalty turn was carried out.
The result ended Team NZ skipper Dean Barker and his crew's 12-race winning streak going back to late last month.
"We've had a good run and have proved it with the way we've been sailing," Barker said.
"But today was one of those days where right from the start it didn't go well."
He took "full responsibility" for the penalty, saying it was a judgment call that didn't come off at a time when a reasonable amount of aggression was needed.
"We still believed, if we could lead and control the race, we could offset that," he said.
"We worked really hard, but the breeze went right quicker than we anticipated."
Jablonski said the penalty was only a small advantage and didn't decide the outcome.
"We had to win the right-hand side of the course, which was favoured, and keep racing," he said.
"The fight goes on until the end. We know how difficult it is to beat the top teams and we're happy to be back in the game -- 1-2 is better than 0-3."
Racing will resume early on Saturday (NZT) with Italy's Luna Rossa leading American rivals Oracle Racing 2-1 in the other semifinal.
Luna Rossa brushed off their agonising defeat of the previous day, when they gave up a big lead and were run down on the final leg, to beat Oracle by 31sec today.
They were given another strong start by Australian helmsman, James Spithill, and this time they adopted more conservative tactics, keeping a tighter cover on USA98 while leading from start to finish.
Spithill described the victory as being particularly pleasing given the loss in race two.
"It was real satisfying to see the boys step up to the challenge, because a result like yesterday can either crumble a weak team, or a strong team will bounce back and really come out and show their strength."
- NZPA
