Rusedski was playing his first event since the birth of his daughter

The 32-year-old beat qualifier Nicolas Thomann on Tuesday but found Santoro a far more difficult proposition.

Rusedski quickly fell behind and France's Santoro, who reached his first Grand Slam quarter-final in Australia last month, eased to a 6-3 6-2 win.

Top seed Rafael Nadal continued his comeback from a serious foot injury by beating Gilles Simon 7-5 6-4.

The Spaniard will now meet Simon's fellow Frenchman Paul-Henri Mathieu, who knocked out seventh seed Radek Stepanek of the Czech Republic 7-6 (7-0) 6-3.

The 19-year-old Nadal, playing his first tournament since October, had to work hard against the 80th world-ranked Simon.

Simon led 5-2 in the first set before reeling off five games in a row to take the set.

I just couldn't take the chances when I had some break points Greg Rusedski

Nadal asked for a break to have a blister treated under his right foot, but the problem did not stop him from easing to victory in the second set.

"I am not in top shape physically and I'm not playing at my best but I still managed to play a good match," he said.

"I have now won two matches in a row and it has really helped my confidence.

"The main thing is to be here and to be able to play. This is my profession and I have really missed the competition."

Rusedski, playing in his first match of the season following the birth of his first child, blamed his defeat on rustiness.

"I just couldn't take the chances when I had some break points," said Rusedski, the British number two.

"Fabrice is a very difficult opponent who mixes it up very well.

"But I haven't played for two and a half months. I have to be pleased so far and I feel I can get better still, so that's a good sign."

Elsewhere, Evgeny Korolev defeated third seed and fellow Russian Nikolay Davydenko 6-4 7-6 (8-6).