The nine-time world champion, returning to the championship with M-Sport, produced a blistering performance to win Stage 4 and shoot from seventh overall into a 0.5s lead over Toyota's Evans.
Evans had emerged as the man to beat on Friday morning after winning the first two stages to leapfrog Thierry Neuville, who started the day as the rally leader after winning Thursday night's super special.
Despite an unfavourable road position, Hyundai's Neuville ended the loop in third, 3.3s adrift and ahead of teammate Ott Tanak, while championship leader Kalle Rovanpera coped admirably with opening the road to end the morning fifth.
Eight-time champion Sebastien Ogier was out of sorts in his GR Yaris, and could only complete the loop in sixth, 6.7s shy of Loeb.
The first gravel stage of the 2022 season belonged to Evans who produced a blistering pace on the Lousa 12.03km test.
After topping Thursday's shakedown on gravel, he was again untouchable as he made the most of the cleaner conditions, being ninth on the road. It was enough to climb into the overall rally lead.
Evans took the stage win by 6.1s after what he declared as a "tidy" run with M-Sport's Gus Greensmith his nearest rival.
Competing in only his second event for M-Sport, Pierre-Louis Loubet was another driver that impressed while making the most of the swept roads to clock the third fastest time, three tenths faster than Tanak and Ogier.
Loeb, who started fourth on the road, admitted he had been too cautious on his run and emerged 9.5s adrift ahead of championship leader Rovanpera, a further 0.8s slower, after facing the worst of the conditions.
Evans continued his strong start to the rally winning the second stage of the day, but it was by the tightest of margins, just 0.1s over Tanak, who slotted into second overall.
Seven tenths covered the top seven in what was a hotly contested stage, as Rovanpera defied his road position to end the test only 0.2s shy of Evans. The Finn posted an identical time to teammate Takamoto Katsuta.
Craig Breen somehow managed to haul his M-Sport Ford Puma to fifth fastest despite battling dust coming into the cockpit.
"Every time I go into a right hand corner it is billowing up in the back here," said Breen. "I couldn't see a thing and it is cutting my f****** eyes."
The dust also proved to be an issue for teammates Greensmith and Loeb, the former losing 10.1s to Evans which dropped him down the overall order.
"The car's full of dust and I can't see anything. I said this yesterday," said Greensmith.
Despite the issues, Loeb finished seventh on the stage behind Sordo and only 0.7s adrift of Evans. The Frenchman reported his dust issue was from struggling to shut the door properly on the Puma.
Loeb however saved his best for the last stage of the loop as he produced a vintage display to win the test and incredibly haul himself into the lead as Evans dropped 10.6s to the M-Sport driver.
Neuville was second fastest on the stage ahead of Rovanpera and Ogier, who was also battling to get the best out of his GR Yaris.
The crews will repeat the morning stages this afternoon, before a run through the Mortagua test, and a short super special stage to conclude Friday's action.
