UPDATE 1-Raymond James cuts LKQ to market perform; shares fall

(Adds details, share movement)

June 19 (Reuters) - Raymond James downgraded LKQ Corp (LKQX.O: Quote, Profile, Research) to "market perform" from "outperform," citing a softening demand and concerns about the automobile parts recycler's Keystone integration, sending its shares down as much as 12 percent.

"Our change in thinking is related to a number of negative macro trends and a now less sanguine view of the Keystone integration issues," Raymond James analyst Sam Darkatsh said in a note to clients.

The slowing, even if slight, may continue to shackle the stock performance, he added.

Darkatsh said temporary integration issues with Keystone acquisition may continue to hurt LKQ's aftermarket growth, at least through the second quarter, and perhaps for the rest of the year.

Last July, LKQ bought over smaller rival Keystone Automotive Industries Inc for about $811 million in cash to create a more comprehensive replacement parts business.

In May, wholesale used-vehicle prices fell sharply, leading to fewer vehicle repairs and a fall in demand for replacement parts.

However, this effect is somewhat offset by more attractive wholesale auction-vehicle prices, which helps LKQ's gross margin and recycled fill rates, the analyst said.

LKQ shares were trading down $1.68 at 17.0 in late morning trade on Nasdaq. Earlier in the session, they touched a low of $16.43. (Reporting by Dhanya Ann Thoppil in Bangalore; Editing by Gopakumar Warrier)