The sharp, all-action Diaz was magnanimous in defeat, saying: 'I had a really great fight with Lazaro who is an excellent fighter, and I gave everyone the show they wanted.
'I thought the scoring should have been a little closer but the judges didn't see that. But I'm not going to give Lazaro a downgrade. He's a good boxer and a great puncher and it just wasn't my day from the judges.'
Also at Bantam Weight, 2007 world champion Sergey Vodopiyanov was surprisingly beaten 13-11 by aggressive Brazilian Robenilson Vieira de Jesus, and Mexico's Oscar Valdez beat Tajikistan's fourth seed Anvar Yunusov 13-7.
USA boxer Michael Hunter revealed he will turn professional after his agonising defeat on countback to Russia's former world champion Artur Beterbiev, saying: 'I've got no complaints about the decision. Now I'm definitely turning pro.'
In the opening Super Heavy Weight bout, world champion Magomedrasul Medzhidov stopped Congo's Meji Mwanba in round two.
A bad session for the USA continued with their third exit, Super Heavy Weight Dominic Breazeale comprehensively beaten 19-8 by Russia's reigning European champion Magomed Omarov.
Italian veteran Roberto Cammarelle, the Beijing 2008 gold medallist and former world champion, looked excellent in dispatching Ecuador's brave Ytalo Castillo Perea 18-10.
Japan's Satoshi Shimizu lost his Bantam Weight contest to Magomed Abdulhamidov 22-17, while Great Britain's Luke Campbell booked his place in the last 16 with a difficult 11-9 win over tough Italian Jahyn Parrinello.
Anthony Joshua was another GB winner in the Super Heavy Weight division.
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