TOKYO, Aug 23 (Reuters) - Japan’s Nikkei share average jumped on Monday, after plumbing an eight-month low in the previous session, as auto-related stocks rebounded from losses following Toyota Motor’s announcement of slashing global production by 40% next month. The Nikkei rose 1.78% to 27,494.24 on bargain-hunting after it hit its lowest since December on Friday. “The rally today seems to be driven mostly by short-covering after big plunges,” said Masato Kogure, group leader of execution at Tokai Tokyo Securities. The market shrugged off a defeat of Prime Minister Yoshihide Suga’s close ally in a mayoral election in Yokohama, Suga’s own constituency. Suga’s falling popularity ahead of a ruling party leadership election expected next month and a general election likely in October has been raising worries about political instability. But some investors think the market could benefit if a new leader is elected, who could possibly enjoy a honeymoon period and help the ruling party win a general election. The broader Topix gained 1.83% to 1,915,14, led by a 3.1% surge in the transport equipment index. The sub-index fell more than 10% last week, one of the steepest drop since early 2020, after Toyota’s announcement. Toyota rebounded 3.4%, while Denso jumped 6.6% and Nissan Motor rose 3.4%, as investors thought that last week’s selling was overdone, and impact of Toyota’s output cut would be short-lived. All but one of the TSE’s 33 industry sub-indexes were in the black, with highly volatile shippers shares up 5.0%. Electric machinery shares also gained 2.7%, with Keyence, Sony < 6758.T>, and Hitachi rising 4.7%, 3.6% and 2.7%, respectively. Casino-related shares rose, with Sega Sammy up 5.3% and Konami gaining 4.4%, even after an anti-casino candidate supported by opposition parties won the Yokohama mayoral race. SoftBank Group lost 1.1%, after its plan to sell British chip designer ARM to Nvidia Corp hit a major hurdle, as a UK regulator found it could damage competition and weaken rivals, and required a further lengthy investigation. (Reporting by Hideyuki Sano; Editing by Subhranshu Sahu and Rashmi Aich) Our Standards: The Thomson Reuters Trust Principles.