The Candystripes looked a superior team but fell behind to a late first-half penalty. KuPS were missing some players due to restrictions on entering the jurisdiction in Derry.
African contingent Ibrahim Cisse (Ivory Coast), Collins Sichenje (Kenya) and Clinton Antwi (Ghana) all return.
As a result they will be a stronger outfit at home, so the tie is very well poised going into the deciding leg at the Savon Sanomat Areena this afternoon, Thursday, August 3 (kick off 5 pm).
However one players they will be out is Urho Nissilä. He looked a threat in Derry and departed for pastures new this week after the expiration of his contract.
There is a major incentive for the winner of this tie. Swiss side Basel were expected to be the next opponent, only to be reduced to nine men in the home game with Kazakhstani side Tobol Kostanay and lose 3-1. The path may be slightly less difficult to the play-off round.
City are looking stronger after the recovery of a number of players in recent weeks, while new signing Paul McMullen impressed as a substitute.
“It would be absolutely amazing,” Derry boss Ruaidhri Higgins told the BBC of thoughts of progressing to the third round.
City have only won two rounds in Europe once before.
They famously dismantled Scottish outfit Gretna in 2006 having already taken the scalp of IFK Goteborg.
The Derry manager added: “KuPS are a proper team. They’ve got real experience in Europe but we know if we replicate our performance in the Brandywell then we can go over there and get a special result.
“We know that we’ve got players who can win matches in an instance. If we don’t have to score, great. If we do have to score then we’ve got the talent within our group to do that.
“If we are going to go there and get a result then we know that we are going to need to be defensively really good as well.
“Everyone knows what is expected of them, it’s been a real team effort in that sense.”
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