Atletico won 2-0 on the day.
Aitor Gismera's opener after 26 minutes and a Salim El Jebari finish midway through the second half condemned the young Reds to defeat in the Spanish capital.
The result leaves Marc Bridge-Wilkinson's side in third spot in Group B with four points, behind Atletico on goal difference.
The visitors started well in front of former Liverpool striker Fernando Torres, who is now part of Atletico's academy set-up. But while enjoying plenty of possession, they struggled to break down an organised opponent.
Unused substitutes: Mrozek, Chambers, Clark.
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