Olimpia’s Juan Manuel Salgueiro and Santa Fe’s Gerardo Bedoya were both sent off on the stroke of half time to reduce the teams to 10 men.
Herminio Miranda and substitute Juan Carlos Ferreyra struck the crucial goals which gives three time winners Olimpia a crucial first leg advantage.
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Since Guus Hiddink arrived at the helm, Chelsea have improved considerably after a tricky start to the campaign.
Newcastle United are staring down the barrel of relegation to the Championship for the second time in the past eight years.