The 3-0 loss came a day after the Americans were beaten 2-1 by Australia. The United States could finish last in its group again if it fails to defeat Japan on Saturday.
Larry Mize, a Dunhill Cup rookie, shot a 72 and lost by two strokes to Eduardo Romero. John Daly, who had a double-bogey 6 at the 17th, shot a 75 and was beaten by two strokes by Jose Coceres. Tom Lehman fell by three shots to Angel Cabrera, who had a 68.
This is the weakest American team, in terms of world rankings, since the Dunhill Cup began in 1985. In no way does it measure up to the squad that will compete at the Presidents Cup next week in Virginia. That team will feature Tiger Woods, Phil Mickelson, Hal Sutton, David Duval and Davis Love III.
Lehman was on the 1999 Dunhill Cup squad that lost 3-0 to Italy and 2-1 to Sweden to finish last in the group.
"It's very disappointing. I don't really feel like talking about it," said Lehman, who will play in the Presidents Cup. "It's not what we came here for and I'm not real pleased."
Defending champion Spain, three-time champ South Africa, Wales and Argentina emerged as favorites to gain the semifinals on Saturday. The Americans face last-place Japan with little to play for except pride.
By the time Lehman reached the final green, he could see a defeated Mize and Daly waiting for him.
Mize trailed from the moment Eduardo Romero eagled the par-5 fifth. Daly was behind all the way after Coceres made a 10-foot birdie putt at the first hole. Daly was three down at the turn but only one behind going to the 17th.
However, his second shot wound up two feet from the wall that runs alongside the famous Road Hole green. He chose to play his shot against the wall and try and rebound it onto the green. But the ball didn't make it up the four-foo high bank and rolled back onto the path.
His chip from the path didn't make it up the bank and he had to play another shot just to make the green. Joining Mize at the 18th green, Daly was still fuming.
Lehman carded a 71 but lost by four to Cabrera, who had four birdies in a bogey-free round.
"The guys are doing well, playing consistently and concentrating well," Romero said. "I said to them at the start of the week that we stood a good chance of winning here because the course suits our games."
But Jimenez and Olazabal carded 67s to go with their opening-round 66s. Jimenez got four birdies in five holes from the fifth to reach the turn in 32. He was chased all the way by Nick Price, who carded a 68.
Olazabal, playing last, even had two 6s on his card. But his eight birdies, including three on the last four holes, overpowered Mark McNulty by four strokes.
A second straight loss means that Zimbabwe is eliminated while the Spaniards play the Swedes for a place in the final four.
In Sweden's victory over China, Patrik Sjoland had five birdies in a bogey-free 67 to beat Liang Wen Chong by five shots. Per-Ulrik Johansson needed two shots to get out of a bunker at 17 in his 72, yet beat Wu Xiang Bing by eight strokes.
Top-seeded Scotland recovered from its 2-1 loss to Germany by edging England 2-1 to stay alive. Colin Montgomerie curled in a 14-footer on the final hole for a 69 to edge Brian Davis by a shot in the opening match. Andrew Coltart assured the victory with a 68 that beat Jamie Spence by five strokes
Wales, with Ian Woosnam, tops the group after its second win, a 2-1 victory over the Germans. On Saturday, it meets Scotland, with Woosnam playing Montgomerie.
South Africa, led by Ernie Els and chasing its third title in four years, downed Ireland 3-0 to top its group. New Zealand blanked France 3-0 to move into second place. Els will be one of the stars on the International team at the Presidents Cup.
On Saturday, the South Africans meet New Zealand and the Irish need to beat France to stand any chance of qualifying for the semifinals.
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