Citroen driver Sebastien Loeb leads the tenth round of this year's FIA World Rally Championship - the Telstra Rally Australia, at the end of day one, with Petter Solberg just 3.9 seconds behind.

Marcus Gronholm retired from the competition as the Telstra Rally Australia headed back to Perth for the Superspecial stage in Gloucester Park. On the rally's eighth stage the reigning FIA World Rally Champion had slid his Peugeot 206 WRC off the road for 17 minutes, promoting Citroen's Loeb to the lead - prior to that the Finn had a 16 second advantage.

Loeb astonished onlookers with his pace through the tricky stages, particularly the 35-kilometre Stirling Long test, where the Xsara WRC driver stopped the clocks eight seconds faster than anybody. Loeb was embroiled in a battle with Solberg throughout the day. That fight for second became the scrap for the lead when Gronholm went off. With less than a second between them, the pair sensationally set precisely the same time on SS8, but Loeb eased ahead on the penultimate stage of the day and although the Subaru driver cut his lead slightly on the superspecial, the Frenchman goes into leg two tomorrow at the top of the leaderboard.

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Colin McRae's Xsara WRC suffered continued brake problems throughout the day. The Citroens of Loeb and Carlos Sainz ran without any mechanical problems.

Loeb's pace has been one of the talking points of the opening leg. The Frenchman belied his lack of Rally Australia experience to post fastest time on the day's longest stage, placing himself second overall behind Gronholm after SS7. Loeb admitted he was quite surprised at his performance, especially when he moved into the lead of the event following Gronholm's problem on SS8. Loeb's only trouble was a spin on third stage of the day.

"I am pushing hard, but I was a surprised when I saw the times for SS6. Last year I struggled on this rally, I wasn't very happy with it, but now things seem to be going well and I am really happy to be leading," noted Loeb, "I am a little bit sad for Marcus, but not too much! I think I can win this rally, but there is a very long way to go yet. It's going to be a big fight."

Sainz meanwhile felt there was something wrong with the set-up of his Xsara WRC for the opening loop of stages. The team made some changes to the handling, but the Spaniard wanted to revert to the original set-up after the middle loop. Sainz's day took a turn for the worse when he rolled his Xsara against a tree on SS8, costing him approximately 15 seconds. He ended the day sixth overall.

McRae's efforts to make a good start to this event, went wrong on the road out of service first thing this morning. The Scot lost the front brakes on his Citroen and then suffered more trouble on the second loop of stages. He ended the day towards the bottom end of the top ten following an overshoot on SS7.

Sainz commented: "This morning the car was understeering its way into corners and then oversteering its way out. We made some changes, but then went back to the original set-up. When I rolled, I came out of the trees and the sun hit me, I missed the braking point, hit the bank and rolled."

McRae added: "What could I do this morning? There was air in the system, which meant we lost the front brakes and then cooked the rears. You can't push hard when the car's like that. Things aren't looking brilliant now."

At Subaru Tommi Makinen's car suffered damper problems on the opening leg, while Solberg's car ran without any mechanical problems.

Solberg led the event after last night's single run at the Perth City Super stage, but the Norwegian dropped back behind Gronholm on today's opener. Solberg held second place for the morning, despite a puncture. He dropped to third place following Loeb's run in SS6, where the Impreza driver dropped 15 seconds with an overshoot and then drove the last seven kilometres with a flat left-rear tyre. Despite those problems, Solberg remained in the thick of the fight for the lead, after Gronholm went off in SS8.

Makinen's day started badly with a leaking damper and a spin on the third stage. His suspension trouble got worse when he felt the front dampers weren't working right through the second loop. The Finn concluded proceedings in fourth place.

Solberg said: "I'm happy that I've set a fastest time today, which shows we've got the pace and our position is good. This is only Friday, this is really only the warm-up for the big fight that is going to come over the next two days. The overshoot came after I misjudged the braking distance on a fast corner, we went quite a long way before we turned and came back."

Makinen continued: "When we had the damper trouble on the second loop of stages, I thought maybe there was something wrong with the transmission, the front of the car wasn't behaving at all like it should be. The spin this morning was my fault, I turned into a corner too early."

Over at Peugeot Harri Rovanpera's 206 WRC suffered brake problems on the first loop of stages, the other two official Peugeots ran without fault.

Gronholm made a fine start to today's stages, moving to the front of the field with fastest time on the first run through the Murray North stage. The reigning world champion ran into trouble on the eighth stage when he slid off the road trying to make it around a tight left-hand hairpin. Gronholm was pushed back onto the road, but dropped 17 minutes in the process. The reigning world champion retired before the last superspecial stage electing to withdraw as he was too far behind.

"It was a very slow speed corner where we went off, an uphill left-hander. The car slid into a ditch and then wouldn't come out of the other side," explained Gronholm, "We had to get more and more people, in the end there was enough and we could go. It is really disappointing and now the championship doesn't look very good."

Burns meanwhile admitted he was finding it hard to get into a rhythm in the early stages, but accepted that the recent rain had eased the pain of running first on the road. The second loop of stages dried more, however, offering more typical Australian conditions. The Englishman finished up third, around 20 seconds in front of Makinen.

Rovanpera's rally didn't start well with the brake problems which dropped him to tenth place after the day's opener. He climbed back up the leaderboard after a clean run through the afternoon to finish eighth overall.

"This morning was quite difficult," commented Burns, "We were on some new roads and I wasn't fully confident to commit to the notes, the afternoon - although it was dry - the conditions were much more consistent. The consistency was better for us, it meant I could see where I was going to get grip to slow the car down. I'm reasonably happy, the two drivers ahead of me are drivers who desperately want to win the rally and close the gap on my championship lead."

Rovanpera added: "I'm not sure what the brake problem was, but the pedal was going soft after just a few kilometres of the first stages this morning. Then we had a really bad tyre choice in the last two stages, not a great day."

At Ford all three Focus RS WRCs have run without mechanical problems through leg one.

Markko Martin's fortunes were mixed today though: the Estonian set a fastest time, but then also suffered some time-consuming spins and overshoots. He was also concerned that his pace notes weren't quite right in some of the stages, he'd made them too slow for the pace he was driving at. As a result he finished up fifth.

Francois Duval is just outside the top ten, gaining more experience of the roads. The suspension and tyres on his Focus were too hard for the second loop of stages, but that aside he hadn't suffered any problems. It was the same story for Mikko Hirvonen, who is driving these roads for the first time in his 2002 Focus.

Martin said: "I made more mistakes today than I have made for the rest of the year combined. I also made my first bad tyre choice, so it hasn't been a great day. I don't know how much time we've lost in total, but it must be quite a bit - we dropped 25 seconds trying to get out of a picnic area this morning."

Duval continued: "It has been very slippery in places today, very difficult conditions. The notes weren't perfect in stage six. Our recce car broke down in there and we had to use a right-hand-drive road car, which wasn't perfect - but I'm not saying this as an excuse."

Hirvonen commented: "It was quite tricky this morning for the first two stages, but then on the third I went flat out and got a good time, I was really happy with that."

At Skoda Didier Auriol and Toni Gardemeister were happy with the way their Fabia WRCs ran through leg one.

Auriol was the leading Skoda driver throughout today, happy to report that he wasn't feeling any pain from his shoulder. The Frenchman admitted he had found the conditions quite difficult in places through the opening leg, however he still managed to end it in tenth place.

His team-mate Gardemeister - who is driving with a broken bone in his right wrist - also reported slippery roads, but the Finn was taking no chances and made a cautious start to the event. He speeded up through the second loop, but felt the car was nervous on the high-speed sections of the stages.

Auriol said: "It's quite hard to judge the roads, some of the time you think the grip is going to be there and you find it really slippery, quite dangerous, but then other times it's okay and the car can be quite safe. We had some oversteer on the second loop of stages, so we're going to have a look at the changes to the diff we made earlier today."

Gardemeister said: "I'm going slowly, slowly. No chances. On the dry roads everything is okay, but when it is getting wet, it's a little bit harder to drive with my arm. I'm not getting any pain from my arm, but obviously I can't drive the same way. A lot of the time I am just using one arm with the car and not putting any pressure on with the other arm."

At Hyundai Armin Schwarz's Accent WRC suffered handling problems on the opening leg, while Freddy Loix's car ran without mechanical fault.

Loix battled for position in the lower reaches of the top ten. Schwarz didn't enjoy the day's stages, lacking confidence in what his car would do. The German ended the leg on the fringes of the top ten, while Loix was ninth.

Schwarz said: "The car is very difficult to drive, very hard work. The transmission is not right, the rear differential is taking a lot of pressure, but it's still not locking. The car is floating, it almost feels like we have the rear wheels steering the car. The team lowered the car for the second loop of stages, which helped the problem."

Loix added: "Our car was working better in the damper conditions this morning. But we haven't had any big problems today."

Of the other entries Marcos Ligato led the FIA Production Car World Rally Championship standings all day until a spin in SS10 - the final test, dropped him down to fourth. Martin Rowe thus inherited the lead, with Niall McShea moving up to second and Karamjit Singh to third.

Rally statistics:

Starters: 49 crews (19 Group A and 30 Group N) started this morning.

Retirements: Gronholm (FIN), Benik (H), Ferreyros (PE), Aur (RO),and 6 other driver.

Today - Friday 5 September: Leg 1 restarted from Perth at 06h00 and covered 805.42km, including 145.20km on nine stages. The first car arrived back in Perth at 20h40.

Tomorrow - Saturday 6 September: Leg 2 starts from Perth at 07h30 and covers 515.13km, including 124.00km on ten stages. The first car is expected to arrive back in Perth at 19h58.

Weather forecast: Expected to remain dry, but cloudy with occasional sunshine.

Stage by stage summary - Leg 2:

SS1 Perth City Super 1 (2.45km)#:
1. Solberg (N) Subaru 1m 31.9
2. Sainz (E) Citroen 1m 32.2
3. Martin (EE) Ford 1m 32.6

# Run yesterday.

SS2 Murray North 1 (18.49km):
1. Gronholm (FIN) Peugeot 10m 29.1
2. Solberg (N) Subaru 10m 31.5
3. Martin (EE) Ford 10m 35.5

Leaders after SS2:
1. Gronholm (FIN) Peugeot 12m 02.3
2. Solberg (N) Subaru 12m 03.4
3. Martin (EE) Ford 12m 08.1

SS3 Murray South 1 (20.12km):
1. Gronholm (FIN) Peugeot 11m 51.8
2. Sainz (E) Citroen 12m 00.9
3. Solberg (N) Subaru 12m 01.5

Leaders after SS3:
1. Gronholm (FIN) Peugeot 23m 54.1
2. Solberg (N) Subaru 24m 04.9
3. Burns (GB) Peugeot 24m 17.2

SS4 Gobbys (5.20km):
1. Martin (EE) Ford 2m 29.6
2. Solberg (N) Subaru 2m 31.2
3. Hirvonen (FIN) Ford 2m 31.4

Leaders after SS4:
1. Gronholm (FIN) Peugeot 26m 25.8
2. Solberg (N) Subaru 26m 36.1
3. Loeb (F) Citroen 26m 50.7

SS5 Stirling West (15.89km):
1. Loeb (F) Citroen 9m 15.3
2. Solberg (N) Peugeot 9m 15.8
3. Gronholm (FIN) Peugeot 9m 17.5

Leaders after SS5:
1. Gronholm (FIN) Peugeot 35m 43.3
2. Solberg (N) Subaru 35m 51.9
3. Loeb (F) Citroen 36m 06.0

SS6 Stirling Long (34.99km):
1. Loeb (F) Citroen 20m 02.1
2. Gronholm (FIN) Peugeot 20m 10.1
3. Burns (GB) Peugeot 20m 19.7

Leaders after SS6:
1. Gronholm (FIN) Peugeot 55m 53.4
2. Loeb (F) Citroen 56m 08.1
3. Solberg (N) Subaru 56m 13.9

SS7 Turner Hill (7.00km):
1. Solberg (N) Subaru 4m 22.2
2. Gronholm (FIN) Peugeot 4m 24.5
3. Burns (GB) Peugeot 4m 25.4

Leaders after SS7:
1. Gronholm (FIN) Peugeot 1h 00m 17.9
2. Loeb (F) Citroen 1h 00m 34.0
3. Solberg (N) Subaru 1h 00m 36.1

SS8 Murray North 2 (18.49km):
1. Solberg (N) Subaru 10m 14.4
= Loeb (F) Citroen 10m 14.4
3. Martin (EE) Ford 10m 15.3

Leaders after SS8:
1. Loeb (F) Citroen 1h 10m 48.4
2. Solberg (N) Subaru 1h 10m 49.3
3. Burns (GB) Peugeot 1h 11m 16.6

SS9 Murray South 2 (20.12km):
1. Loeb (F) Citroen 11m 30.0
2. Solberg (N) Subaru 11m 33.1
3. Martin (EE) Ford 11m 35.7

Leaders after SS9:
1. Loeb (F) Citroen 1h 22m 18.4
2. Solberg (N) Subaru 1h 22m 22.4
3. Burns (GB) Peugeot 1h 22m 57.0

SS10 Perth City Super 2 (2.45km):
1. Duval (B) Ford 1m 33.5
2. Martin (EE) Ford 1m 33.7
= Makinen (FIN) Subaru 1m 33.7
4. Solberg (N) Subaru 1m 33.9

Leaders after SS10 / Leg 1:
1. Loeb (F) Citroen 1h 23m 52.4
2. Solberg (N) Subaru +3.9
3. Burns (GB) Peugeot +39.1
4. Makinen (FIN) Subaru +1m 00.2
5. Martin (EE) Ford +1m 05.0
6. Sainz (E) Citroen +1m 12.6
7. McRae (GB) Citroen +1m 25.0
8. Rovanpera (FIN) Peugeot +1m 52.9
9. Loix (B) Hyundai +2m 41.6
10. Auriol (F) Skoda +2m 52.7