(Adds details, analysts' comments, updates share movement)

By Bhaswati Mukhopadhyay

BANGALORE, July 31 (Reuters) - Automobile-parts recycler LKQ Corp (LKQX.O: Quote, Profile, Research) posted a better-than-expected quarterly profit, as revenue more than doubled, and raised its 2008 earnings outlook, sending its shares up as much as 21 percent.

LKQ, which expects full-year organic revenue growth to be in the low-double digits, provides aftermarket collision replacement parts, recycled parts such as wheels, bumper covers and lights used to repair light vehicles.

Results in the latest second quarter were boosted by a 23 percent growth in recycled products revenue. However, the aftermarket, other new and refurbished parts business was a drag, growing only 1 percent.

LKQ bought car-parts maker Keystone Automotive Industries Inc in 2007 to boost its aftermarket business that accounted for almost half of the company's second-quarter revenue.

"We believe higher fuel prices... contributed to lower reported insurance claim activity which in turn adversely affected our growth on aftermarket, other new and refurbished parts revenue," CEO Joe Holsten said in a statement.

William Armstrong of C.L. King & Associates said the aftermarket business is growing slowly because a lot of these parts are more cosmetic than mechanical, and in the event of minor crashes people may choose not to repair them.

Analyst Gary Prestopino of Barrington Research believes the aftermarket business has also been hit as these products are more expensive compared to recycled ones.