MELBOURNE, 20 Feb 2015 (AFP) - New Zealander Ko was joined at six-under 140 by Thailand's Ariya Jutanugarn and Korean world No.20 Jang Ha-Na after 36 holes.
Jang's 69 was the only sub-70 round on a day when the weather and the toughening course took their toll on the golfers.
Ko was spectacular in parts, firing an eagle on the par-four 15th by holing out with a nine-iron from 124m.
But the occasional bogey from Ko kept the chasing pack in the mix.
Only once at the 2012 Canadian Women’s Open has Ko held or shared the lead after the first two rounds of an LPGA Tour event and gone on to win.
Jang, a multiple winner in Asia, is already making her mark in her maiden LPGA Tour season, and gave up just two bogeys in Friday's round.
"I think only very simple thinking, fairway and green and then two putts and that’s it, no more thinking," Jang explained.
Ariya three-putted the first hole, but ignited her round with a long eagle on the par-five 10th to shoot a 71.
Rising English star 18-year-old Charley Hull was outright fourth at four under 142, two shots behind the leaders.
Overnight leader South Korea's Lee Il-Hee fired an 82 in her second round to only scrape in one shot inside the five-over-par cut line.
Australian veteran Karrie Webb battled to make the cut.
The world No.9 made a par up the last to shore up her weekend berth, although she is 11 shots from the lead and with her title defence in doubt.
"At this stage I'm not thinking about a result. I'm thinking about bringing on to the course what I'm doing in practice," Webb said
Among those who missed out on the halfway cut were past winners Yani Tseng and Britain's Laura Davies.
Leading second-round scores in the LPGA Women's Australian Open at Royal Melbourne (par 73) on Friday (Australia unless stated):
140 - Jang Ha-Na (KOR) 71-69, Lydia Ko (NZL) 70-70, Ariya Jutanugarn (THA) 69-71
142 - Charley Hull (ENG) 71-71
143 - Jessica Korda (USA) 72-71, Amy Yang (KOR) 73-70
144 - Gwladys Nocera (FRA) 71-73
145 - Lee Mi-Hyang (KOR) 75-70, Marion Ricordeau (FRA) 72-73, Katherine Kirk 72-73, Julieta Granada (PAR) 73-72, Christina Kim (USA) 74-71, Melissa Reid (ENG) 71-74
146 - Mina Harigae (USA) 75-71, Beatriz Recari (ESP) 75-71
147 - Christine Wolf (AUT) 75-72, Marianne Skarpnord (NOR) 75-72, Minjee Lee 76-71, Jenny Shin (USA) 76-71, Paz Echeverria (CHI) 71-76, Kelly Tan (MAS) 74-73, Mika Miyazato (JPN) 73-74, Ayako Uehara (JPN) 72-75, Choi Chella (KOR) 72-75, Tiffany Joh (USA) 72-75
148 - Catriona Matthew (SCO) 74-74, Choi Na-Yeon (KOR) 74-74, Karine Icher (FRA) 75-73, Kylie Walker (SCO) 75-73, Alena Sharp (CAN) 70-78, Feng Shanshan (CHN) 74-74, Ai Miyazato (JPN) 73-75, Mariajo Uribe (COL) 72-76, Holly Clyburn (ENG) 73-75
Selected scores
149 - Amy Anderson (USA) 77-72, Maria Hernandez (ESP) 75-74, Cheyenne Woods (USA) 74-75, Q Baek (KOR) 77-72, Laetitia Beck (ISR) 78-71, Brooke Pancake (USA) 71-78, Beth Allen (USA) 78-71, Sophie Walker (ENG) 73-76, Kendall Dye (USA) 78-71, Sydnee Michaels (USA) 73-76, Christel Boeljon (NED) 76-73, Marina Alex (USA) 72-77, Katie Burnett (USA) 74-75, Alison Walshe (USA) 74-75, Cheng Ssu-Chia (TPE) 76-73
150 - Pernilla Lindberg (SWE) 76-74, Mo Martin (USA) 77-73, Chloe Leurquin (BEL) 75-75, Anne-Lise Caudal (FRA) 75-75, Lee Il-Hee (KOR) 68-82, Mallory Blackwelder (USA) 75-75, Min Lee (TPE) 72-78
151 - Kwak Min-Seo (KOR) 70-81, Garrett Phillips (USA) 74-77, Karlin Beck (USA) 74-77, Ryu So-Yeon (KOR) 77-74, Kris Tamulis (USA) 75-76, Amy Boulden (WAL) 77-74, Hsu Wei-Ling (TPE) 78-73, Kristy McPherson (USA) 75-76, Maria McBride (SWE) 74-77, Park Ju-Young (KOR) 73-78, Karrie Webb 73-78, Ann-Kathrin Lindner (GER) 78-73, Lisa McCloskey (COL) 75-76
Cut was made at +5 (151)