Japan's Mazda Motor Corp said on Monday that it would raise up to 95.9 billion yen ($1.1 billion) by issuing new shares and selling treasury stock.

Mazda, which posted a third straight quarterly loss in April-June as the economic slump hit car sales worldwide, said it would use the bulk of the proceeds for research and development of low-emission cars including gasoline-electric hybrid models.

The pressure to offer hybrid models has grown in Japan as consumers flock to gasoline-electric vehicles, which receive the biggest tax breaks under a government initiative to drive sales of cleaner vehicles.

In a filing with the Tokyo Stock Exchange, Mazda said it would issue 315.2 million new shares and sell 96.8 million treasury shares.

The new share issue will dilute its outstanding shares by 22 percent.

($1=89.78 Yen)

(Reporting by Taiga Uranaka; Editing by Chris Gallagher)