Federer (far right) hopes to win his 12th title of 2006

Federer faces defending champion David Nalbandian in Sunday's Shanghai opener at 0500 (GMT) but says any one of the eight players can win the title.

The 2003 and 2004 champion said: "This is one of the toughest Masters Cup I've played. It's open as everyone has something great in his game.

"I see danger written all over the event, that's why I had to be ready."

Federer and Nalbandian have been drawn in the Red Group of round-robin matches along with Ivan Ljubicic and Andy Roddick, who play later on Sunday.

The Gold Group features Rafael Nadal, Nikolay Davydenko, Tommy Robredo and James Blake, all of whom begin their campaign on Monday.

606 DEBATE: Will Federer win this year?

Unlike last year's injury-hit finale, the tournament features the top eight players in the world.

If the event goes to form Federer, the world number one, should face Nadal in the final.

The Spaniard has beaten Federer four times this season but Federer is refusing to look beyond his opener with Nalbandian.

"I'm not thinking of Nadal right now," Federer said.

"He's in a different group, but if we play each other in the semi-finals or the final that would be great."

Nalbandian, the world number seven, is confident he can dish out a repeat of last year's final, when he beat Federer in five sets.

"I believe that if I play good I can do anything and I can win again here," said the Argentine.

The US$3.7m round-robin tournament takes place at the Qi Zhong stadium.

Red Group: Roger Federer (Swi), Ivan Ljubicic (Cro), Andy Roddick (USA), David Nalbandian (Arg)

Gold Group: Rafael Nadal (Spa), Nikolay Davydenko (Rus), Tommy Robredo (Spa), James Blake (USA)

Opening matches (Sunday, 12 November):
Federer v Nalbandian
Ljubicic v Roddick