TOKYO, Aug 19 (Reuters) - Japan’s Nikkei share average fell sharply on Thursday to hit a seven-month low following a report that Toyota Motor plans to slash its global output by 40% next month due to chip shortages. The report was the final straw for a market already struggling to shake off concerns that the fast-spreading Delta variant of COVID-19 could delay an economic recovery. The Nikkei fell 1.1% to 27,281.17, plunging below its July trough to reach a level last seen in early January. The broader Topix lost 1.39% to 1,897.19, edging near its July trough, with Toyota, the biggest company by market capitalisation, falling 4.4%. “It should have been a surprise for the market because Toyota has done so well even as its rivals have been hit by chip shortages,” said Yasuo Sakuma, chief investment officer at Libra Investments. The shock rattled other auto and autopart makers. Denso lost 4.3%, while Subaru shed 2.8% and Honda Motor fell 2.7%. The report also stoked fears that rising COVID-19 infections in South East Asia could disrupt supply chains of many Japanese manufacturers. Semiconductor-related shares continued to smart from worries that their growth might be peaking, with MSCI Japan semiconductor index shedding 3.2% to a five-month low. Many other cyclical shares were also dented by worries that the Delta variant could slow the global economic recovery when central banks around the world are gradually trying to trim their stimulus measures. The subindex for steelmakers fell 5.3%, its biggest since March 2020, while non-ferrous metal firms and securities brokerages slumped 3.1% and 3.0%, respectively. Softening oil prices hit shares of trading houses, with Mitsui Co losing 6.1% and Marubeni shedding 3.6%. Oil companies also slipped, with Eneos Holdings, Idemitsu Kosan and Inpex losing 3.5%, 2.8% and 3.7%, respectively. Among the few bright spots, developers of drugs and vaccines for COVID-19 rose amid the country’s deepening health crisis. Chugai Pharmaceutical rose 4.5%, while Shionogi gained 4.1% and Daiichi Sankyo added 2.2%. (Reporting by Hideyuki Sano, additional reporting by Daiki Iga and Tomo Uetake; Editing by Uttaresh.V and Subhranshu Sahu) Our Standards: The Thomson Reuters Trust Principles.