Armstrong, who suffered a puncture, came in 2:08 behind stage winner Thor Hushovd of Norway. The American lost time to his rivals, including defending champion Alberto Contador and trails his former Astana team-mate by 50 seconds. Swiss Fabian Cancellara regained the yellow jersey.
"They took a knock," Armstrong said when asked about his chances of victory.
"We lost significant time," added the American, now 18th overall, 2:30 behind Cancellara. Frank Schleck, fifth overall in the last two years, tumbled to the ground in the fourth of seven cobbled sectors on the day's menu and broke his collarbone.
The Saxo Bank rider will take no further part in the race. Team-mate Cancellara, the Paris-Roubaix winner on the same roads in April, took the initiative on the first cobbles, 85 kms from the line, and amply deserved to claim his yellow jersey back from Frances Sylvain Chavanel.
"I have mixed feelings. It was a great day for Saxo Bank but we lost Frank. When we heard that he'd crashed, I told Andy (Schleck) not to look back and to go for it," Swiss Cancellara told reporters.
Contador, who fared much better than expected on the cobbles, also lost a little time after breaking his wheel in the last two kilometres.
