Alcoa Inc said on Monday it will slash its dividend, issue stock and convertible notes worth about $1.1 billion and trim its 2010 spending in a bid to weather the steep downturn in demand for aluminum.

Alcoa plans to issue 150 million shares in common stock, which would yield $850 million based on Friday's closing price, and other $250 million in convertible notes due in 2014.

Alcoa shares sunk 10 percent, or 62 cents, to $5.50 in post-market trade, erasing the 39 cent gain during the regular trading session on Monday

(Reporting by Matt Daily; editing by Jeffrey Benkoe)