Frenchman Gilles Panizzi has grabbed the lead of the 11th round of the FIA World Rally Championship, the Rallye Sanremo, which started in earnest in northern Italy today.

Panizzi, who is aiming for a third successive victory on the event, took over the top spot after two of today's eight stages and a string of fastest times moved his Peugeot 206 WRC into a 23-second lead by the end of the day's action.

Panizzi's closest rivals have all been in French machinery - his nearest challenger is Philippe Bugalski's privately-run Citroen Xsara, while his Peugeot team-mates Marcus Gr?nholm and Richard Burns are closely matched as they fight for third. The Finn inched clear of the Briton on today's closing stage.

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The Peugeot 206 WRCs of Richard Burns and Gilles Panizzi have been reliable. Marcus Gr?nholm, however, encountered a loss of boost pressure this morning and he then suffered brake fade and gearbox glitches in the second group of stages.

Panizzi has been the dominant force during today's stages. Despite the fact that he is still recovering from a shoulder injury, the Frenchman set fastest times on all but one of the day's eight tests to grab the lead and build a 23-second advantage overnight. Team-mate Richard Burns was an early threat, but the Englishman got drawn into a battle with Philippe Bugalski for second overall. By the end of the day, though, the reigning world champion had had to cede that position to his French rival and he then lost third to his recovering team-mate Marcus Gr?nholm on the day's final stage. Gr?nholm had led after today's opening test but then the Finn's car lost boost for one test and suffered brake and gearbox glitches for two more.

''It's been going well today and I've got a really good feeling with the car,'' said Panizzi. ''I know I can attack with it. My shoulder is not a big problem for me at all. I know I can drive at this speed for the rest of the rally without taking risks.''

Team-mate Marcus Gronholm added: ''It's been a quite frustrating day because I've got a good feeling with the car and I know from the times of Gilles and Richard that we could have been right up there. But we had this loss of boost and then some more problems this afternoon, so we've got a lot of work to do. Already I think we've given away too much time to Gilles.''

At Ford the Focus RS WRC02s of Colin McRae and Markko Martin have been ok. However, Carlos Sainz's example was forced to retire before the day's fourth stage because of an engine oil leak.

Martin has been the quickest of Ford's drivers. The Estonian threw caution to the wind with experimental set-ups and they worked, allowing him to inch into the top six and become involved in a very close fight with Tommi M?kinen for fifth overall. The Finn's retirement handed that place to Martin, although he has Citroen privateer Jesus Puras breathing down his neck.

Colin McRae lost time this morning when he stalled at a hairpin and then suffered two punctures - one in SS2, the other in SS4. The Scot then stalled on the startlines of SS6 and SS7, losing valuable time, and he ended the day in 10th, over a minute off a points placing. The third Focus WRC02 of Carlos Sainz was ninth overall after SS3 but on the way to the next stage, the Spaniard's car suffered an engine oil leak and he was forced to retire.

''I think today shows that we're making slow progress with the whole package,'' commented McRae. ''It's certainly better than it was before and even after this morning, we found some more improvements in the set-up. The biggest problem today is that we've really only had one clean stage so it's very hard to get into a rhythm in that situation. As for scoring a point, it doesn't look too promising at the moment.''

Team-mate Markko Martin noted: ''I wouldn't say I'm surprised but it's certainly nice to be fighting with guys like Petter and Tommi in this sort of position. We had a good set-up which worked well this morning and although I've been pushing hard and maybe slid wide at a few corners, there haven't really been any massive moments. Hopefully we can just keep this sort of form up for tomorrow.''

Subaru's Impreza WRC2002s driven by Petter Solberg and Achim Mortl have run well. Tommi M?kinen was forced to retire, however, when he broke a front-left driveshaft and couldn't fix the problem before the start of SS8.

Subaru fine-tuned the settings of the rear differentials on its Imprezas before this event, and the modification has clearly resulted in a car that M?kinen relishes. The Finn has been a stronger force than on recent events, as he has kept his car in the top six for much of the day, embroiled for several stages in a fight with Ford driver Markko Martin. Four-times world champion M?kinen eventually inched clear this afternoon but then he noticed a broken driveshaft before the start of SS8 and ran out of time trying to fix the problem.

His team-mate Petter Solberg has rarely been more than a second or two behind M?kinen on all stages, but the young Norwegian lost 10 seconds with a jump start penalty and then a similar amount with a spin in SS5. He'll start tomorrow's stages in seventh. The third Impreza driver, Austrian Achim Mortl, has concentrated on building up mileage in the car after his early exit from the Rallye Deutschland last month. He holds 14th overnight.

Petter Solberg said: ''I don't believe the jump start was right because I've never had a jump start in rallying, ever. It's a shame if we get the penalty because we've been so close to Tommi all day and we've been fighting for points all the time. For sure you can see we're making progress because we're so much closer to the other guys now.''

At Mitsubishi meanwhile the Lancer Evo WRC of Fran?ois Delecour was reliable until the last stage, when it suffered turbo failure. Alister McRae's car smoked badly in its engine bay before SS2 and the Scot has lacked pace thereafter. His team was studying how the Lancer was using less water in its injection system than it should.

Delecour believes that Mitsubishi has found much better low-end torque and response from the Lancer's engine, and the Frenchman has held down a top-10 placing for much of today to prove his point. He lost turbo boost before the day's last stage, though, and that dropped him to 13th overnight. His team-mate Alister McRae has suffered from a mysterious lack of pace today - Ralliart engineers have been investigating why the car has been using less water than normal in its injection system. The Scot's main time loss came when he noticed smoke under the bonnet before one stage, stopped to check the problem and then failed to attach the bonnet pins correctly before the next test. It flew up shortly after the start, smashing the car's windscreen. McRae holds 18th overnight.

Delecour said: ''We have found some more torque and response in low revs with the engine and it's made quite a big difference. The turbo problem is very frustrating because it's not easy to make up any time here.''

Team-mate Alister McRae commented: ''We saw some smoke coming from under the bonnet so we decided to investigate. I must have forgotten to put the bonnet pins back in properly because shortly after the start, it flew up and obviously damaged the windscreen. It's the sort of thing that I've seen happen plenty of times in the past and I always wondered, 'How on earth did they forget to do that?'. Now I know...''

The Hyundai Accent WRC3 of Freddy Loix has been generally ok, although the Belgian insists that its engine has not yet been set up correctly after its turbo failure and subsequent turbo change after yesterday's shakedown.

Armin Schwarz's car, meanwhile, was forced to retire with a broken bottom arm in its rear suspension after the German clipped a crash barrier on today's opening stage.

Schwarz said: ''I'm so, so disappointed. It was my mistake. The barrier was on the inside of the corner and I just saw it coming towards the rear of the car. I hoped I might get away with it but I felt it hit the rear wheel rim and then on the next straight, it was clear that we had a problem. There was a bolt broken in the suspension so we couldn't continue. I find it really hard to believe that after all of the work that I've had to do just to get here after my accident in Germany, I've retired so early.''

Loix added: ''We're improving the car with every service and every chance to look at data but for my view, I don't think the car is quite as fast as it was when we finished the pre-event test. Normally the engineer will sit in at the end of shakedown just to give the final settings for the engine but of course, we weren't able to continue shakedown yesterday so when we started today's opening stage, we did so with a fresh turbo. It's a bit frustrating and bad luck.''

At Skoda the Octavia WRCs of Toni Gardemeister and Kenneth Eriksson have been basically reliable, although Gardemeister did complain of a lack of compressor pressure in the day's fifth stage. He also broke a front wishbone by clipping a bank at the final corner of the day's third stage but since service followed immediately, he didn't lose any time as a result. The third Octavia, driven by Roman Kresta, suffered from fluctuating front and centre differential pressure in the opening stages.
Sporting: All three Skodas lie outside the top 10 after a difficult day for the Czech manufacturer. Neither of its lead drivers, Kenneth Eriksson or Toni Gardemeister, has reported any significant problem but they'll start tomorrow's second leg in 16th and 12th places respectively. Third driver Roman Kresta holds 17th, meanwhile.

Gardemeister said: ''We're trying hard and the car feels fine but the times just don't seem to be there. On the more aggressive surfaces the car is good but when the asphalt is smooth and shiny then it's very slippery and it moves around a lot.''

Of the other entries the Citroen Xsara WRC of Philippe Bugalski and Jesus Puras might be run by privateer team Piedrafita but they are essentially the same specification of cars which triumphed on the last WRC round in Germany. In Bugalski's hands, the Xsara has proven to be a competitive force today, as the Frenchman has been the closest driver to Gilles Panizzi on a number of stages. He ended the day's action in second overall, 23 seconds off the lead.

Puras lost time with a tardy gearchange in the second group of stages but the Spaniard has also been capable of challenging the factory crews. Despite his problems, he ended the day in sixth overall and closing on Markko Martin. Other privateer World Rally Car drivers to feature strongly included Bruno Thiry (11th overnight) and Cedric Robert (eighth).

The Junior World Rally Championship section has witnessed one of its closest scraps of the season, with Italians Nicola Caldani, Andrea Dallavilla and Giandomenico Basso swapping tenths of seconds all day. Caldani emerged from the final loop of stages this evening with an advantage of less than four seconds over Dallavilla, with Basso less than seven seconds further adrift in third.

The Super 1600 class is actually topped by two crews not registered for the Junior WRC - Martinique-based driver Simon Jean-Joseph leads in his Renault, ahead of European Championship contender Renato Travaglia.

Rally statistics - Leg one:

Starters: 53 crews (52 Group A and 1 Group N) started this morning.

Retirements: Schwarz (D), Sainz (E), Makinen and 6 other drivers.

Today - Friday 20 September: The second part of Leg 1 started from Sanremo at 06h00 and covered 538.88km, including 147.25km on eight special stages.

Tomorrow - Saturday 21 September: Leg 2 starts from Sanremo at 06h00 and covers 520.83km, including 150.57km on six special stages. The first car is expected to arrive in Sanremo at 20h01.

Weather forecast: Cloudy, with possible showers

Stage by stage summary - Leg one:

SS1 Passo Teglia 1 (14.44kms):
1. Gr?nholm (FIN) Peugeot 10m 23.5
1. Bugalski (F) Citroen 10m 24.3
3. Burns (GB) Peugeot 10m 26.3

SS2 Passo Drego 1 (26.46kms):
1. Panizzi (F) Peugeot 17m 41.9
2. Gr?nholm (FIN) Peugeot 17m 45.6
3. Burns (GB) Peugeot 17m 46.6

Leaders after SS2:
1. Panizzi (F) Peugeot 28m 08.5
2. Gr?nholm (FIN) Peugeot 28m 09.1
3. Burns (GB) Peugeot 28m 12.9

SS3 Ghimbegna 1 (10.44kms):
1. Panizzi (F) Peugeot 6m 38.4
2. Burns (GB) Peugeot 6m 40.4
3. Solberg (N) Subaru 6m 41.1

Leaders after SS3:
1. Panizzi (F) Peugeot 34m 47.4
2. Burns (GB) Peugeot 34m 53.3
3. Bugalski (F) Citroen 34m 55.2

SS4 Cosio 1 (19.19kms):
1. Panizzi (F) Peugeot 12m 13.0
2. Gr?nholm (FIN) Peugeot 12m 14.4
3. Burns (GB) Peugeot 12m 16.0

Leaders after SS4:
1. Panizzi (F) Peugeot 47m 00.4
2. Burns (GB) Peugeot 47m 09.3
3. Bugalski (F) Citroen 47m 12.5

SS5 San Bartolomeo 1 (25.38kms):
1. Panizzi (F) Peugeot 15m 03.7
2. Bugalski (F) Citroen 15m 05.0
3. Burns (GB) Peugeot 15m 09.8

Leaders after SS5:
1. Panizzi (F) Peugeot 1h 02m 04.1
2. Bugalski (F) Citroen 1h 02m 17.5
3. Burns (GB) Peugeot 1h 02m 19.1

SS6 Passo Teglia 2 (14.44kms):
1. Panizzi (F) Peugeot 10m 19.4
2. Bugalski (F) Citroen 10m 19.7
3. Gr?nholm (FIN) Peugeot 10m 22.5

Leaders after SS6:
1. Panizzi (F) Peugeot 1h 12m 23.5
2. Bugalski (F) Citroen 1h 12m 37.2
3. Burns (GB) Peugeot 1h 12m 47.9

SS7 Passo Drego 2 (26.46kms):
1. Panizzi (F) Peugeot 17m 30.0
2. Bugalski (F) Citroen 17m 33.6
3. Gr?nholm (FIN) Peugeot 17m 35.1

Leaders after SS7:
1. Panizzi (F) Peugeot 1h 29m 53.5
2. Bugalski (F) Citroen 1h 30m 10.8
3. Burns (GB) Peugeot 1h 30m 30.5

SS8 Ghimbegna 2 (10.44kms):
1. Panizzi (F) Peugeot 6m 40.4
2. Gr?nholm (FIN) Peugeot 6m 41.6
3. Martin (EE) Ford 6m 42.8

Leaders after SS8:
1. Panizzi (F) Peugeot 1h 36m 33.9
2. Bugalski (F) Citroen +22.8
3. Gronholm (FIN) Peugeot +39.0
4. Burns (GB) Peugeot +42.2
5. Martin (EE) Ford +1m 02.8
6. Puras (E) Citroen +1m 04.7
7. Solberg (N) Subaru +1m 12.4
8. Robert (F) Peugeot +1m 32.2
9. Loix (B) Hyundai +2m 09.0
10. C.McRae (GB) Ford +2m 25.2