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The 3.5-1.5 loss means the Otago quintet has to play catch-up in the following rounds and must perform well against Bay of Plenty this morning and Poverty Bay-East Coast this afternoon to have a realistic chance of taking the over-40 title at the Maraenui course.
Otago No 1 Andrew Hobbs got behind early and when Harbour's Mike Leeper birdied the 12th and 13th holes, he had little chance of getting in front.
North Otago's Gary Creedy looked like beating Harbour's Reg Fleet as he led most of the way with birdies on the second, seventh and 12th holes.
Creedy was dormie two up but Fleet finished strongly, birdieing the final two holes to snatch the half.
At No 3, Stephen Hitchcox was the only Otago player to win, beating former New Zealand representative Phil Mosley by 2 and 1.
Hitchcox was solid from tee to green but encountered putting woes on the outward nine. However, after turning square, Hitchcox pulled away on the homeward nine to finish the match with one hole to spare.
On debut, Balmacewen's John McIntee turned two down but fought back to trail Mark Dawson by one.
He played well on the homeward nine but did not make inroads as he failed to sink the putts that mattered.
A barrage of early birdies from Harbour's Rob Noffke put Otago No 5 Kyle Geary on the ropes at three down after six holes.
Geary twice recovered to trail by one but Noffke finished strongly to win on the 16th green.