Sainz, who was celebrating his 10th anniversary in world championship rallying, had been in contention with the leaders during the opening stages of the day, but encountered gearbox problems on the fifth stage. The 34- year-old Sainz lies second in the championship table behind McRae.
Britain's McRae had been leading after the fifth stage but his Subaru stopped near the end of the sixth stage. Although he was able to push the car to the end of the stage, he did not reach the service point in time and was forced to drop out.
With those two gone, Sweden's Kenneth Eriksson went on to finish the day with a 14 seconds lead over Tommi Makinen, the world champion from Finland. The two Scandinavians took turns at the front during 170km of stages held on gravelled roads.
Makinen, in a Mitsubishi, slowly chipped away at the lead and moved in front at the end of the ninth stage. But he dropped to second again on the 11th when Eriksson opted for a wider-treaded tyre which paid dividends on the loose surface.
Eriksson is currently fourth in the championship and a victory in Portugal, the fourth event in this year's calendar, would give him the lead.Reuse content