Loeb leads in Germany

The world champion was fastest through the first two stages of the loop and currently heads a Citroen one-two-three.

But it is the independent OMV Citroen of former works driver Francois Duval that holds second, 5.8 seconds behind Loeb, and 2.7 seconds ahead of Dani Sordo in the second factory car.

Duval was fastest of all in SS3, although Loeb lost four seconds in the stage when his handbrake briefly refused to release at a hairpin.

Championship leader Marcus Gronholm had a muted start to the event and was only seventh fastest in SS1 as he struggled for confidence on his chosen tyre compound.

Set-up changes between stages got the Finn back on the pace, and he moved up to fourth place by the end of the loop, 14 seconds behind the leader.

Subaru's Petter Solberg is running fifth, ahead of Mikko Hirvonen in the second Ford.

Solberg's teammate Chris Atkinson led the chase of the Citroens after stage one but then hit trouble in SS2, as he went off the road and into a ditch. Eight minutes were lost as he struggled to rejoin.

"I just took too big a risk in a cut, and it spun me around," Atkinson said. "We went off the road backwards and into a ditch."

Toni Gardemeister currently holds seventh in his independent Citroen, with Xevi Pons struggling with his Subaru's brakes in eighth.

Leading times after SS3:

Pos  Driver        Car       Time
 1.  Loeb          Citroen   36:39.9
 2.  Duval         Citroen   +   5.8
 3.  Sordo         Citroen   +   8.5
 4.  Gronholm      Ford      +  14.0
 5.  P Solberg     Subaru    +  22.2
 6.  Hirvonen      Ford      +  25.8
 7.  Gardemeister  Citroen   +  41.9
 8.  Pons          Subaru    +  54.3
 9.  Kopecky       Skoda     +1:00.2
10.  Latvala       Ford      +1:00.5