Rafael Nadal insisted he can still win the ATP Finals for the first time despite a damaging 7-6 (9/7), 7-6 (7/4) defeat against Austria's Dominic Thiem on Tuesday. 

Thiem overpowered Nadal behind closed doors at London's O2 Arena to put a dent in the Spanish star's bid to finally lift the one major prize missing from his packed trophy cabinet. 

Nadal had beaten Andrey Rublev in straight sets in his first match, but the 34-year-old was unable to cope with Thiem in a high-quality clash. 

"He played I think an amazing match, and I played well too. So my feeling is not negative. I lost, but I had plenty of chances in the first and then I had break up in the second set," Nadal said. 

"I'm happy with the way I played. I think my chances are bigger to have a very good result now than five days ago because the level of tennis, even if I lost today, for me is much higher." 

Now Nadal, who lost the 2010 and 2013 finals of the event, has to beat reigning champion Stefanos Tsitsipas in his last group match to keep alive his hopes of reaching the semi-finals of the prestigious season-ending tournament. Greek Tsitsipas had a narrow defeat against Russia's Andrey Rublev on Tuesday. 

Nadal, who last month equaled Roger Federer's record of 20 Grand Slams by winning the French Open, has won 86 titles but just one of those has come on an indoor hard court. 

The world No. 2 has qualified for the ATP Finals for 16 years in a row, but his record at the eight-man elite event pales in comparison with Federer and Novak Djokovic after six injury withdrawals.