David Lopez led the Team Sky charge as the race split apart in a hectic finish to stage two at Volta a la Comunitat Valenciana.
The Spaniard came home in a group of chasers, 23 seconds back on solo victor Tony Martin (Katusha) in Denia.
The finishing circuit featured two climbs and slick descents of the Alto de Montgo, with the second ascent producing fireworks as a number of riders jumped free.
Martin pushed clear and was able to time trial to the finish, 11 seconds ahead of a chase group of six riders, which included Nairo Quintana (Movistar).
Lopez was the first Team Sky jersey over the line, followed by Michal Kwiatkowski (+56" back), and defending champion Wout Poels and Philip Deignan (+57"). A strong ride meant Lopez now sits fourth overall, 21 seconds off yellow.
Sport Director Servais Knaven talked TeamSky.com through a tricky finish: "On the climb Wout didn't have the perfect legs to follow the lead guys so lost some time. We had David Lopez up front, and then Phil Deignan and Kwiato who could ride with Wout and try to bring him back. There were only two kilometres following the descent to the finish, so it was just a case of trying to lose as little time as possible.
"There were a few tricky parts on the descent but in the end the gap was too big to bring it back. In terms of the race we'd managed to take some advantage yesterday. Obviously it's a pity but everything is not lost. Of course it would be nice if we could have finished with the lead guys.
"Tomorrow should normally be a sprinter stage and then Saturday is the big summit finish. But every day is important and we will now focus on tomorrow."