* Engine failure sidelines Loeb in France
* Raikkonen crashes out between stages (Adds Loeb ruled out of rest of event)
Sebastien Loeb retired from the French rally with an engine failure after just two stages on Friday, ending the Citroen driver's hopes of winning his home event and blowing the championship wide open.
Citroen said the seven-times world champion, who leads Ford's Mikko Hirvonen by 15 points with two rounds remaining after France, would not be able to re-start the event on Saturday.
"We could not risk running this engine here and then having the problem come back in Spain. It's very disappointing for Sebastien, the team and all of his fans," team manager Sven Smeets told the autosport.com website.
With Loeb sidelined in the day's third stage while leading the rally, Spaniard Dani Sordo was leading the race for Mini -- a first for the team since their return to the world championship.
Sordo was a second ahead of Norway's Petter Solberg, in a privately-entered Citroen, with Loeb's team mate Sebastien Ogier in third place and 2.8 seconds off the pace.
Hirvonen was back in sixth place, one minute 20 seconds behind Sordo, after running off the road in the morning but a strong result by him or Ogier on Sunday will slash Loeb's lead.
Championship leader Loeb barely had time to enjoy the cheers of his adoring fans in his native Alsace region when he stopped.
"We broke the engine. We had an alarm, oil pressure, in the road. So we called on the radio to ask what we could do," he told the wrc.com website.
"We cut the boost, then the engine felt like it had no power, then it started to make some noise," said the Frenchman, who has won every title since 2004.
"I don't know exactly what the damage on the engine [is] but for sure I cannot continue because I will break it completely."
Loeb, who crashed out of the previous rally in Australia, has rarely been troubled by mechanical problems.
Finland's Kimi Raikkonen also had a day to forget and will not be restarting the rally either after the former Formula One champion suffered a bizarre accident between the second and third stages.
Raikkonen ran into the back of Henning Solberg's Ford Fiesta on the way to stage three and broke the suspension while in ninth place.
"He hit me on the left side, I saw his car in the air and then he disappeared into a ditch. He said it was not my fault and just to drive on," said Solberg of the collision that occurred as both were making their way to the starting checkpoint.