The exit of third seed Kafelnikov came soon after the top- seeded Sampras announced that he was pulling out of the tournament after injuring his back in a doubles match on Tuesday.
The fourth seed, Alex Corretja of Spain, and the seventh seed, Mark Philippoussis, of Australia, had already been eliminated on Tuesday.
Kafelnikov, a semi-finalist here in 1995, squandered the chance of unseating Sampras as world No1 and was bundled out by the more determined Squillari.
The Spaniard Alberto Berasategui, seeded 14, came into this tournament without a win this year but appears to have rediscovered his form. Yesterday he was made to fight by his compatriot Albert Portas but came through to win 7-6, 2-6, 6-1.
The ninth seed, Albert Costa, the winner of the Estoril Open on Sunday, maintained his good form as he raced to a 6-4, 6-1 win over his fellow Spaniard Fernando Vicente.
Andre Agassi had to drop out of the Japan Open in Tokyo because of a right shoulder problem he suffered when he won the Salem Open in Hong Kong last week. Tour organisers said that Agassi was not able to get over the injury in time for match play.
Richard Krajicek, of the Netherlands, won his second-round match when his compatriot John van Lottum retired after four only games because of neck and shoulder strain.
Krajicek was 3-1 ahead when Van Lottum shook his hand and told him he could not continue.
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