Dan Martin showed superb form but was left with more than a little frustration at the end of today's third stage of the Vuelta a España, with the Irishman surging impressively on the final climb and then being pipped for the win by the Australian Michael Matthews.

Martin looked to have the stage win in the bag when he jumped inside the final 200 metres, overhauling the Katusha rider Giampaolo Caruso who had made his move seconds earlier. However, Matthews, who is regarded as one of the world’s fastest sprinters on such uphill finishes, had marked Martin and came off his wheel with 50 metres to go.

He reached the line just over half a bike length clear, raising his arms in triumph as Martin punched the air in dismay.

“Obviously getting second again is frustrating,” Martin told the Irish Times afterwards. “I have been second a fair few times in the last year now, and to miss out again is hard.”

In his Irish Times diary on Monday Martin said that his ability to cope with heat is an asset, and so it proved. “I felt good all day and the guys did an incredible job for me. I reckon I must have had 15 to 20 bottles, drinking 10, 12 litres of water during the day,” he said.

“It was really hot out there, 40 degrees, and you saw the effects of that in the final. It wasn’t that hard of a finish but the group was decimated. Personally I was still feeling really, really fresh, and even at the finish line I felt good.

“It is just that Bling (Matthew) is faster than me. I maybe needed a bit steeper climb to get rid of him, but that is the way it is. Obviously the legs are good and we will move on.”

The 197.8 kilometre third stage from Cádiz to Arcos de la Frontera was considerably tougher than Sunday’s second stage, with four category three climbs looming along the course as well as a short, steep uphill finish to the line.

Five riders clipped away early on, and from this group Luis Mas Bonet (Caja Rural - Seguros RGA) eventually pushed ahead alone in the second half of the stage. He was ultimately reeled in by the bunch with 25 kilometres remaining and had to make do with the King of the Mountains jersey as a consolation prize.

With a short, steep climb rearing up inside the final two kilometres, teams were aware that it was crucial that stage contenders and general classification riders had to be well placed. The pace ramped up and Caruso's Katusha team hit the front inside the final kilometre to try to set him or Joaquim Rodriguez up for the win.

Martin was in approximately 20th place at that point, but later dismissed suggestions that being so far back had perhaps cost him the win.

"It didn't matter, because the group stalled a little at that point," he said. "I wanted to use that momentum to come from behind and try and get a gap. Unfortunately [2013 Tour de France winner] Chris Froome attacked at the same time when I was coming past. I went on his wheel; maybe if I hadn't done that I might have got a gap. Then they would have had to close it.

“Maybe that was an error, perhaps I should have gone straight past Chris. But I still ran out of legs at the line. We will move on and try again.”

With a time bonus up for grabs for the win, Matthews took over as race leader from Alejandro Valverde, the Movistar rider who was below par in the finale after a crash inside the final hour. Matthews is now four seconds ahead of Valverde's team-mate Nairo Quintana (Movistar), with yesterday's leader slipping eleven seconds off the pace to third overall.

Martin is continuing to get time back after Garmin-Sharp’s disappointing opening day team time trial, jumping up 59 places to 24th overall.

Compatriot Philip Deignan (Sky) was 86th on the stage, one minute 38 back, and is now 76th overall.

The race continues on Tuesday with a lumpy164.7 kilometres from Mairena del Alcor to Córdoba.

Martin said that he is content with things for now, reasoning that today’s performance proves he is right where he needs to be. “It has shown that I have come into the race in good condition. I knew that already but to ride in that type of finish against some of the best guys in the world really shows that I am in the right position at the moment,” he said.

“Stage six is the next hilltop finish, which is also one which suits me as well. It is four and a half kilometres in length; normally a steep climb of four kilometres or so is very good for me. So we will see what happens.”