Ferrero missed two months earlier this year with wrist and knee injuries but had an impressive week in Stuttgart, where he clinched his first title in 13 months.
Stebe, a 20-year-old left-hander, also had a successful week in Stuttgart, winning his first two matches on the tour before losing in the quarterfinals.
Another German wild card, Tobias Kamke, also had an upset win, beating seventh-seeded Juan Ignacio Chela of Argentina 6-1, 6-4 in the second round,
While his countrymen advanced, German Davis Cup player Philipp Petzschner was upset by qualifier Marsel Ilhan of Turkey, then stunned reporters with bizarre answers to questions about the match.
Asked to comment on Ilhan's unexpected 6-2, 4-6, 7-6 (5) victory, Petzschner replied, "I hope that HSV reaches the Europa League this season."
When asked to describe how he managed to double-fault on match point, Petzschner again referred to the Hamburger SV Bundesliga football club, saying it had acquired good new players.
Petzschner has been under fire for a lackluster performance in Germany's Davis Cup loss to France and for three straight first-round losses.
Jarkko Nieminen of Finland beat 10th-seeded Alexandr Dolgopolov of Ukraine 6-3, 1-6, 6-4, fifth-seeded Gilles Simon of France cruised into the third round over Sergiy Stakhovsky of Ukraine, 6-2, 6-1 and Fabio Fognini, the No. 15 from Italy, beat Victor Crivoi of Romania 6-1, 7-5.
Radek Stepanek of the Czech Republic, Juan Monaco of Argentina, Pablo Andujar of Spain and Daniel Gimeno-Traver of Spain cleared the first round.
Wild card Stebe upsets Ferrero at German Open
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