McDowell had the early lead but Larrazabal, who had birdies at Nos. 1 and 8 on the front side, caught McDowell with a birdie at the 10th hole.
Larrazabal had five consecutive pars before a chip-in for birdie at No. 16 moved him in front by himself. He birdied No. 17 to stretch the lead.
"I hit the ball as good as the last few months and putted well today," Larrazabal said. "For me, it is almost a record to shoot a bogey-free round at Valderrama and five-under is just great, I played really well."
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