Chris Rea is an artist that has surely more than a few things in common with Mark Knopfler – playing a red Fender Stratocaster is one of them. Chris plays a lot of slide guitar, so his Strat is normally tuned to open E, and his sound is different for this reason but often his clean Strat sounds are still similar to some early Dire Straits stuff.
I found this video on youtube, originally it was included on a VHS video tape with the Fender Chris Rea signature Stratocaster that was available in the late 90ies.
Chris explains how he gets his signature sound on his fiesta red 1963 Strat, which he calls ‘Pinky’. He demonstrates e.g. the effect of a compressor pedal on a clean sound (at about 5:15), an effect that is helpful for Knopfler sounds as well (just listen to e.g. ‘In the Gallery’ or ‘Lady Writer’).
Also notice that his tremolo is blocked with a piece of wood (at 1:55). This was not the case on Mark’s Strat I think, as he occasionally presses down his tremolo on stage (e.g. in the outro of ‘News’), but it seems that Mark also had no floating tremolo but had it decked (using five tremolo strings so that the bridge is pressed down on the body).
There is another detail that I found interesting: at about 17:10 Chris demonstrates how he removes some harshness of a Strat by rolling the volume pot down to about ‘8’. I recommend to try this for the Knopfler sound, too. Rolling back the pot a bit reduces the strength of the so-called resonance peak of he pickup (more on this in this blog post), resulting in a sweeter, less harsh sound. You can then turn up the treble control of your amp a bit tomake the sound brighter again, this really sounds different from fully turned up with less treble on the amp, worth trying out. The effect is a bit similar to using that old Morley volume pedal that Mark had in the 70ies as this also reduces the pickup resonance peak.