Peugeot's Marcus Gronholm has taken the early advantage this morning, on the first loop of stages - he now leads the Telstra Rally Australia by 10.3 seconds.

The Finn started brilliantly in SS2 - SS1 was ran last night - and despite damp conditions, was quickest through the Murray North stage, 2.4 seconds clear of Petter Solberg who was second while Ford's Markko Martin was third.

After two stages though, things were still tight at the top, and while Gronholm moved ahead of Solberg to take the overall lead, less than 12 seconds split the top five.

In SS3, seemingly unaffected by being one of the first cars through the loose gravel covered stage, Gronholm was fastest again, eight seconds clear of Citroen's Carlos Sainz who was next quickest - himself another of the drivers with an early road position.

The intermittent rain seemed to have levelled the playing field somewhat, making conditions muddy and extremely slippery for all, but generally reducing the typical Rally Australia road cleaning effect, which penalised the first few cars.

Third quickest through the stage was enough to keep Solberg second overall, while Richard Burns moved up to third. The numerous road junctions on the 20km section caused a few problems, Tommi Makinen, Sebastien Loeb and Markko Martin all had to stop and re-join the route after taking wrong turns.

"We had to do a complete donut on SS3 when I took a wrong junction and had to turn the car around in a lay-by," explained Makinen, "We certainly lost some time there, but apart from that it's been fine."

The next test, SS4, saw a short dash through the red-earth roads near North Dandalup, and Martin took the first Australian stage win of his career. In a close contest, less than ten seconds separated the top ten cars, but the best performances came from the rising stars of the WRC rather than the more experienced names. 28-year-old Solberg was second; 23-year-old Mikko Hirvonen third and 29-year-old Sebastien Loeb fourth.

Gronholm had to make do with fifth, but remained on top overall. "Everything's ok and we're just driving normally," said the Peugeot star, "We've got no real problems but there's quite a lot of loose gravel on the road. We'll keep going at this pace but the conditions are fairly slippery."

Solberg, who lies second overall, added: "I got a front-right puncture on the first one of that group [SS2], it was my fault, but it caused a bit of a problem on the next one because once I put the spare on and swapped the others over I found it more difficult on the corners, the car wouldn't turn in as well. I'm sure I could have gone faster without that, but I'm very happy otherwise."

Loeb currently completes the top three on the overall leaderboard, while championship leader, Burns is fourth and Sainz fifth.

"The timings on the road sections are very tight, so it's been a bit like a road race," commented the Englishman, "We didn't even have time to change tyres between stages. Apart from that, we've got no problems."

The action now resumes at 12.12 pm local time [5.12 am BST], with another loop of three tests, including the longest of the rally, Stirling Long - 34.99km [SS6].



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