VALENCIA, Spain - China Team scored a major upset by beating BMW Oracle for their first win in the Louis Vuitton Cup after the American favourites lost their headsail in the second set of round robins on Monday.

It was expected to be a cakewalk for the slick BMW Oracle team in their top against bottom clash but they got off to a bad start, blowing out their headsail in the first leg.

The 2003 LV Cup finalists limped on after failing to set a second headsail, hoping for a mistake from their error-prone rivals, but the Chinese team held their nerve to win by three minutes 15 seconds.

"These things happen in sailing, it's part of the territory. Maybe the compensation is that losing a couple of points to China Team is not as expensive as losing them to some of the other competitors," said Ian Burns of the BMW Oracle team.

The Americans were joined at the top of the rankings on 23 points by Italians Luna Rossa, who saw off Swedish boat Victory Challenge.

In excellent racing conditions, with a stiff breeze, local favourites Desafio Espanol pulled off a thrilling win to pip +39 on the line by just one second.

The Spaniards trailed for most of the race but closed on +39, who suffered problems with their sails, and slipped ahead 200 metres from the line, to take the two points.

Desafio held on to fourth place with 19 points, one behind Team New Zealand who beat Mascalzone Latino. Victory Challenge are fifth with 16.

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