Thursday's free practice times

The German, who has won all five races this season, clocked one minute 14.741 seconds on his fastest lap of the day.

British BAR test driver Anthony Davidson was second in the afternoon with Rubens Barrichello third.

But Jaguar had a miserable day with Mark Webber's car catching fire while Bjorn Wirdheim collided with a wall and Christian Klien hit a barrier.

Takuma Sato had been second quickest in the morning with Briton Jenson Button third best in the hour-long session, which was delayed when Webber's Jaguar caught fire.

The Australian was forced to stop as he exited the chicane on a flying lap 32 minutes into the hour-long practice run.

I think we are closer than we look at the moment, I really do Jenson Button

He got out of his car unhurt and grabbed a fire extinguisher from a marshal to help put out the flames.

BAR driver Button re-stated his ambition to break Schumacher's dominance despite finishing well adrift of his German rival's pace.

"We should be happy with our day," he said: "We've had three cars run without major problems and I feel confident.

"I think we are closer than we look at the moment, I really do. We should get quicker and quicker."

Ralf Schumacher, meanwhile, saw his hopes of repeating last year's Monaco pole position vanish when his Williams needed a new engine.

Under new rules, drivers can only have one engine per race, each replacement costing them 10 places on the grid.

Even if Ralf were to qualify in pole position on Saturday, he would start in 11th.

BAR team boss David Richards hailed Davidson as "the star of the day" after he finished second to Michael Schumacher in the second session.

But Davidson was quick to put his drive into context.

"With regard to going quicker than some of the race drivers, it's always a bonus when you look at the timing screens and see yourself up the top," he said.

"But I've got a slight advantage in that I get two more runs on a Friday whereas the race drivers are conserving their engine mileage.

"I don't have to and I'm doing the majority of the tyre work so I just go out there banging in the laps.

"Being quickest is never a bad thing, but it's not as relevant to me as it is to Jenson Button and Sato.

"I've been nearing the pace of them both on numerous occasions in testing, and on Fridays I've been genuinely quick on circuits, so it's been pretty good."

Davidson, who raced in two Grands Prix in 2002 as a replacement at Minardi, has been testing for BAR for three seasons.