Aluminum producer Alcoa Inc on Tuesday posted a 3 percent rise in third-quarter earnings, as a gain on the sale of its stake in a Chinese aluminum company offset weaker aluminum prices.

Alcoa also raised its share buyback program -- from 10 percent to 25 percent of outstanding shares, or about 217 million shares. At the current share price that is worth more than $6.7 billion.

Bruce Zaro, Chief Technical Advisor at Delta Global Advisors called the share repurchase somewhat surprising.

The good news is that the cash flow has been so strong that they are able to do this, he said.

Alcoa's net profit rose to $555 million, or 63 cents per share, compared with $537 million, or 61 cents per share, in the year-ago period.

Earnings from continuing operations were 64 cents per share, up 2 cents from a year earlier, the Pittsburgh-based company said.

Wall Street analysts lowered their profit expectations for Alcoa in recent weeks as the price of aluminum has slipped. It was not immediately clear what the consensus estimate of 66 cents per share compares with, according to Reuters Estimates.

The falling metals prices, along with the exclusion of the company's soft alloy extrusion business that now forms a joint venture with Sapa in June, helped drag revenue in the period 2.6 percent lower to $7.4 billion.

Macroeconomic drivers such as the weakening U.S. dollar, higher petroleum costs and market softness in North America impacted the quarter, said Alcoa Chairman and CEO Alain Belda.

Despite these challenges, we have established all-time records for revenue, net income, earnings per share and cash from operations in the first nine months of the year, he said.

The results cap a busy few weeks for Alcoa. Last week, it said it was close to selling its packaging and consumer business and its automotive castings business. It also plans to restructure its electrical and electronic solutions business in the Americas and Europe.

Last month, the company sold its stake in Aluminum Corp of China Ltd (2600.HK: Quote, Profile, Research) (Chalco) for about $2 billion, a $1.8 billion gain on an investment. Alcoa bought the stake six years ago as a financial investment and said its role as an investor was no longer needed by the now-established Chinese company.

The moves allow Alcoa to focus on its mining bauxite and producing alumina business, which in turn is manufactured into aluminum.

They're not knocking the cover off the ball every quarter, but they're in a very positive operating environment and they're doing well enough to make us happy holding the shares, said Chris Armbruster, research analyst at Al Frank Asset Management.

Alcoa's share price has dropped off a 52-week high of $48.77 in July and on Tuesday closed at $39.72. The stock rose slightly in after-hours trade.

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