Loeb leading from Sordo in Spain

Marcus Gronholm initially took the lead of the rally, but the world championship leader slipped down to third place as the Citroen pair fought back in SS2.

"I have to expect to be first, and to beat Marcus this weekend," said Loeb. "This morning I wasn't confident with the car, but I pushed harder on the next stage."

Loeb credited his improved pace to a suspension adjustment that he made to his Citroen C4 on the road section between the first two stages of the event.

"The car was oversteering more than I expected," he added. "But we made an adjustment to the suspension on the road section, and it was much better."

Loeb is the favourite for this weekend's event as it is an asphalt rally, but it is crucial for his world championship chances that Sordo can stay in second place to take more points away from Gronholm.

"Sebastien is ahead, but that is not important," said Sordo. "Marcus is important. My car was understeering, but it was still easy to drive, so I'm happy."

Gronholm was disappointed with his own performance in SS2, where there was more grip than there had been during the first stage.

"I didn't have the confidence to attack when the Tarmac was more abrasive," said the Finn, who leads Loeb by 10 points in the championship.

"We didn't make the right tyre choice, but I still could have gone faster, because we had the same tyre as Sebastien."

Mikko Hirvonen was disappointed to be a distant fourth already after he made a cautious start to the event, but behind him Petter Solberg was upbeat with his progress.

Francois Duval has not yet repeated his Rally Germany form on his return to the cockpit of a Kronos Citroen Xsara, but the Belgian worked his way up to sixth place after losing a lot of time with a spin in SS1.

Xevi Pons and Manfred Stohl currently complete the top eight, while Jan Kopecky and Jari-Matti Latvala are within striking distance of the points.

Chris Atkinson was frustrated to end the morning in 11th place, after the Australian made the wrong tyre choice for the start of the event.

"We were expecting the roads to be drier than they are, so we chose a much harder tyre than everyone else," he said. "It's cost us a lot of time."

Pos  Driver      Car           Time 
 1.  Loeb        Citroen      26:56.1
 2.  Sordo       Citroen       +  3.7
 3.  Gronholm    Ford          +  4.4
 4.  Hirvonen    Ford          + 27.1
 5.  Solberg     Subaru        + 34.2
 6.  Duval       Citroen       + 46.6
 7.  Pons        Subaru        + 49.7
 8.  Stohl       Citroen       + 51.2
 9.  Kopecky     Skoda         + 51.6
10.  Latvala     Ford          + 57.3