Karlsson, who despite enjoying his second straight day without a bogey to go along with three birdies, saw the leaderboard get bunched up right behind him. Canonica is two back, and three players, Paul Lawrie, Barry Lane, and Trevor Immelman, are just three off the lead.
Karlsson, at 14-under-par, has a bogey-less streak of 43 holes, his last coming on his 11th hole on Thursday.
Canonica, measuring in at 5'2', will be looking up at both the leaderboard and his playing partner come Sunday, after a well played 6-under 65, that included four birdies down the stretch, to get him to 12-under.
Ranked 59th on the Order of Merit, Canonica looks to better his runner-up finish to Sergio Garcia at the Canarias Open in April.
Lawrie, fresh off a victory in the Celtic Manor Resort Wales Open, posted seven birdies in his round of 66. Hitting less than 40 percent of the fairways, Lawrie's good use of his putter allowed him to climb into contention.
Lane, his best finish a second place in the Benson and Hedges Open, had a chance to set the course record and pull within one of Karlsson on the 18th. Instead, his birdie try went four feet by the hole and missed the comebacker for par. Otherwise, he had a spectacular day, recording eight birdies that got him into a tie for third.
Immelman, who has a pair of second-place finishes in 2002, had a bogey-free day and six birdies for a 6-under 66. From South Africa, Immelman is the suprise South African on the leaderboard considering world Nos. 3 and 4, Ernie Els and Retief Goosen, are also in the field.
British Open champion Els finally did come alive, starting with an eagle on the first, and shot a 5-under 66, but is still eight off the pace.
Nick Faldo rebounded from a 1-over 72 on Friday with a 2-under-par 69 that has him in a tie for 12th. Currently 21st on the Order of Merit, Faldo has not won a tournament since the 1997 Nissan Open.
Full-field scores from Omega European Masters