Hood won a sudden-death leg in a high-quality match to advance to the last 32, having missed a bull dart to win in straight sets.
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Noppert fought back to force a decider and, helped by some decisive finishes, created a winning chance for himself in a dramatic final set.
But Hood, the 32-year-old debutant, held his nerve late to post a final 78, setting up a third-round tie with fellow English left-hander Ryan Meikle.
Both players averaged over 102 and hit over 40% of their doubles attempts.
Hood told Sky Sports: “It was a good game and I knew it would be because Danny is a class player.
“I don’t worry about the pressure, I just throw the darts and if it’s good enough, it’s good enough. Tonight it was.”
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Seventeen of the 32 seeds have been eliminated in the first two rounds of the tournament, with Noppert being the highest-ranked player to fall so far.
Also defeated on Tuesday were two-time former champion Peter Wright, who lost in straight sets to German debutant Arno Merk, and Northern Ireland’s Daryl Gurney, who came out on the wrong end of a deciding set with England’s Callan Rydz.
Merk’s reward is a third-round match with three-time champion Michael van Gerwen, who beat William O’Connor 3-1, while Rydz will face 11th seed Josh Rock, the man who accompanied Gurney to World Cup glory in June.
Rock was a dominant winner against Australia’s Joe Comito, while two-time Scottish champion Gary Anderson put in a classic display in a 3-1 win against England’s Connor Scutt, recording an average of 105.41 on the day after his 55th birthday.
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The tournament will resume on Saturday, when the third round is scheduled to begin.
The third round qualifiers will be played in a longer format than the first two rounds, with matches decided by best of seven sets instead of best of five.
Merk ‘stunned’ after beating ‘legend’ Wright
Wright, who triumphed at Alexandra Palace in 2020 and 2022, was well below par against Merk: he won only two matches and averaged less than 80.
The 55-year-old Scot hit just two of his 15 darts in doubles and Merk, who finished with an average of 92.17 and hit nine of his 19 double attempts, took full advantage.
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“I’m stunned, I can’t believe it,” the 33-year-old said after his win against 30th seed Wright. “I just beat a legend and I’m very happy.
“If I play like this, I can be dangerous for anyone.”
Gurney, the 22nd seed, lost a close contest to Rydz, who had two checkouts of 167 in a match that went to a tie-break in the fifth set.
Meikle recovered from two sets down to beat New Zealand’s Jonny Tata, while 19th-seeded Dutchman Jermaine Wattimena defeated England’s Scott Williams and will play Anderson next.
Tuesday’s results
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Jonny Tata 2-3 Ryan Meikle
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Daryl Gurney 2-3 Callan Rydz
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Jermaine Wattimena 3-2 Scott Williams
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Peter Wright 0-3 Arno Merk
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Danny Noppert 2-3 Justin Hood
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Gary Anderson 3-1 Connor Scutt
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Michael van Gerwen 3-1 William O’Connor