Defending champion Cameron Smith produced a stunning seven-under-par second round to surge into the lead at the Australian PGA Championship on a leaderboard dominated by home favourites.

The top six are all from Australia, including joint first-round leaders Jake McLeod and Matt Jager, with American Harold Varner III three shots off the pace in seventh as the highest-ranked non-Australian on the Gold Coast.

Smith started the day four shots off McLeod and Jager, who were tied for second and tied for fourth respectively after their second rounds, but the 25-year-old rolled in six birdies on his opening nine holes to turn in for 31, with his only blip coming at the fourth.

Two more gains came on the back nine helped reach to nine under overall, one stroke ahead of Marc Leishman, who recorded six birdies and two bogeys, and McLeod.

McLeod briefly opened up a two-shot lead on his back nine, but he shot three over on his final six holes to give countryman Smith the initiative.

Speaking to the europeantour.com, Smith said: "It was good. I thought I struck it nicely yesterday and the putts weren't quite going in. I just didn't quite have the speed yesterday.

"I did a little bit of extra work this morning on the green and it paid off. I was actually getting putts to the hole today, which is nice.

"I was just trying to do my best. I decided I wanted to get to 10, that was kind of my goal before Friday's end, so one off is not too bad. Seven under, you can never complain about seven under."

Dimitrios Papadatos and Jager are at seven under alongside Christopher Wood, who hit a six-under-par 66, with Varner III at six under.

Englishman Andrew Johnston is in a group of five one shot further back, while Wales' Oliver Farr is in a trio on four under.