Day 1pm: Gronholm stars

The Flying Finn has been in control of the rally since the first stage kicked off in Perth on Thursday evening. Riding high Gronholm set out this morning brimming with confidence to take the first two stage wins to eke out a lead of 10.8 seconds over Subaru's Petter Solberg.

The Norwegian's challenge was not to last though for the Subaru driver hit a tree on the third stage of the day and was forced out of the rally. Engineers repaired the damage to enable Solberg to rejoin the rally under the SupeRally system in time for the final two stages of the day - the two Perth City superspeicals - which he stormed through to take both wins.

At least Solberg managed to get some stages under his belt before he retired; Ford's Markko Martin didn't even start the rally proper. The Estonian suffered engine problems on Thursday night's event-opening superspecial which engineers were unable to fix and brought to an end any hope Martin had of taking second in the championship from Solberg.

With the Norwegian out of the way Citroen's Loeb began to reel the Finn in after taking stage wins on SS4 and SS5 so that an advantage of 18.3s was reduced to 16.8s as the cars went into the morning's service break.

Not to be outdone, Gronholm returned with the same attitude he showed earlier in the morning to extend his lead over the Frenchman to 21.4s after victory on SS6 and SS7.

"This has been a near-perfect start to the rally," Gronholm said. "We've had no problems at all. The car has been working well and we are pushing hard without taking unnecessary risks. Conditions were a bit damp this morning, but now they have dried out completely. Sebastien is coming quickly behind us so we have to keep going at a good pace, but I'm not making any changes to the car and I feel quite confident."

Loeb is gunning for a record-equalling sixth win of the season, but the Frenchman admitted that he found it difficult as road-sweeper.

"Marcus is very fast," said Loeb. "We lost some time this morning cleaning the road because of the gravel, but I'm not sure this is penalising that much. The road is drying up and it's a bit better now. I had to change my way of driving, but the car has better grip now. It's still a bit wet, but the last few stages were much better."

Harri Rovanpera is in third spot, but over a minute off the pace of his Peugeot team-mate, and with Ford's Francois Duval a further 30s back in fourth spot the Finn is drifting in no-man's land with nowhere to go and no-one to catch him.

Duval has been off the boil and at one point was fighting the advances of Subaru's Mikko Hirvonen. The Belgian has admitted that his set-up on the Ford is not to his liking and was the reason behind his lack of pace in the morning's opening stages, while Hirvonen has complained of brake problems.

"It has been a difficult start," Duval said. "The set-up felt too soft and I wasn't happy. We were expecting wet weather this morning, but it has remained dry. My pace-notes worked fine, but I didn't take any risks. It's too early for that. The roads are difficult. Last night's rain left them damp and they're extremely slippery."

The Production WRC is building to an exciting climax with title contenders Alister McRae and Jani Paasonen heading into the second leg of this weekend's event separated by just one car in the class and locked in a fierce battle for the Group N crown.