World number one Federer, who beat Nadal in last year's final, swatted aside Swiss compatriot Stanislas Wawrinka 6-3, 6-1 and Briton Murray crushed Victor Hanescu of Romania 6-2, 6-1.
Meanwhile, Jelena Jankovic thrashed local favourite Anabel Medina Garrigues 6-2, 6-0 to make the women’s quarterfinals but it was a gutsy display from Aravane Rezai that caught the eye on Thursday.
The spirited 23-year-old Rezai survived a nail-biting tiebreak to beat Germany's Andrea Petkovic 6-4 7-6.
Rezai bustled into a 6-1 lead but appeared to lose her cool over the time Petkovic was taking between serves. The German fought back to level at 6-6 after some wild shots from Rezai, but she could not complete the comeback. Petkovic lost 10-8 and left the court in tears while Rezai milked the applause of the Madrid crowd.
Eighth seed Samantha Stosur set up a quarterfinal meeting with Venus Williams beating Switzerland's Patty Schnyder 7-6, 6-2. China's Li Na, the 13th seed, battered Ukraine's Alona Bondarenko 6-3, 6-4 and will play Israel's unseeded Shahar Peer in the last eight.
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