Petter Solberg will carry a useful advantage into leg two of the Telstra Rally Australia after a day on which Subaru appeared to have the upper hand and two of his main rivals went out.

Solberg began the day at the head of the field, having emerged fastest from the two superspecial runs on Thursday night, and retained the advantage as he finished second to team-mate Chris Atkinson over SS3, the first forest stage of the event. Atkinson, however, was not about to defer to his supposed team leader and, winning SS4, moved into a ten-second lead over the Norwegian.

Second, to Solberg, next time around kept the local hero in charge, but his day was about to take a turn for the worse when a damaged steering arm slowed his progress on SS6 and SS7, even though Atkinson could not recall an impact to suggest the cause of the problem. The situation was serious enough to drop him to 13th heading to the day's first service halt, however, leaving the Australian with a mountain to climb if he was to return to the fray with Solberg.

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The Norwegian returned to the top of the timesheets after his team-mate's setback, but was coming under increasing pressure from world champion Sebastien Loeb. The Frenchman did not win a stage until SS7, but closed to within seven seconds of the lead as he did so and, winning again on SS8, eased into a slender lead which must have had his rivals groaning with despair.

Top spot proved to be a poisoned chalice this time around, however, and, like Atkinson before him, Loeb found that leading the rally was not a good place to be. Unlike his Subaru rival, however, the Citroen driver found that there was no immediate way to retaliate as his Xsara was bent around a tree, the legacy of a heavy shunt on SS9.

Loeb was not alone in 'retiring' on day one, however, for he had been preceded on SS7 by the demise of Peugeot rival Marcus Gronholm, who hit a rock and broke both suspension and wheel. Despite trying valiantly to return to the service halt, the lanky Finn was forced to call it a day when the suspension gave up the ghost altogether.

It was not a good day for Peugeot generally, as the other works car, driven by Daniel Carlsson rather than Nicolas Bernardi or Markko Martin on this occasion, departed on SS3, the first of the day. The Swede also endured a heavy off, which resulted in the 307 WRC bursting into flames, although, like Loeb and Daniel Elena, the crew were unhurt. Privateers Antony Warmbold and Xavier Pons also failed to complete leg one.

Loeb's exit left Solberg with a comfortable lead over new second place man Colin McRae, the Scot having pushed the Skoda Fabia for all it was worth as he worked his way up the order. Although the equally hard-charging Francois Duval overhauled former world champion on the first of the evening's superspecials, the pair remain split by just 1.4secs.

Fourth placed Harri Rovanpera lies another 15secs adrift after a good day for the Mitsubishi team. A stage win in front of the Perth crowd on the final test of the day capped a leg that saw both Lancers in the points positions, with Gigi Galli belying his learning curve to back Rovanpera up in sixth spot.

The two Mitsubishis sandwich the best-placed privateer after eleven stages, with Manfred Stohl pushing his Citroen Xsara into fifth spot and looking good for another points finish if he can keep his consistency. The German, however, could have found himself behind both works Fords had it not been for penalties of one sort or another.

Both Toni Gardemeister and Roman Kresta began the day being slapped with a 30secs penalty for not having the same engine in their new 2006-spec cars as they had finished the paired Rally Japan round with. Ironically, had they started with the Japanese unit, both would have been penalised for running an out-of-homologation unit, so it was something of a no-win situation for Malcolm Wilson's boys. It was to their credit, however, that both ended the day in the points, despite also having time-consuming offs during the day. Without the setbacks, both Gardemeister and Kresta could have been top five material.

Another Ford lies just outside the points, with Dani Sola's privateer WRC 04 ninth, the next obstacle to be overcome by the recovering Atkinson. The Aussie bounced back from his two-stage nightmare to claim second fastest time on SS8 and fastest on SS9, before thrilling the home crowd by leading the pack around the SS10 superspecial. The Subaru man ended the day just over two minutes off the lead - having lost around two-and-a-half during SS6 and SS7....

The supporting PCWRC class provided a more intriguing battle for control, even though Britain's Mark Higgins never relinquished top spot. Toshi Ara pressured the Subaru man all the way, the gap between them see-sawing with every stage. By the time the field returned to the overnight halt, the difference was 7.7secs, having once been below one second. Gabriel Pozzo sits third in class, just under 20secs further back, and with more than half a minute in hand on closest challenger Aki Teiskonen.