TOKYO, Sept 3 (Reuters) - Japanese Prime Minister Yoshihide Suga will pull out of a party leadership race in September, officials said, setting the stage for his replacement after just one year in office. Suga, who took over after Shinzo Abe resigned last September, citing ill health, has seen his support ratings sink to below 30% as the nation struggles with its worst wave of COVID-19 infections ahead of a general election this year. Japan"s Nikkei average futures jumped 2% after the reports that Suga would not run in the contest for ruling party chief. Ruling Liberal Democratic Party officials said Suga would finish his term as its president, meaning he would stay on until his successor is chosen in party-wide election slated for Sept. 29. The winner of the contest is all but assured of being premier because of the LDP"s majority in the lower house. The government has been considering holding the general election on Oct. 17. "Honestly, I"m surprised," said LDP Secretary General Toshihiro Nikai, who had declared his support for Suga in party leadership contest. Suga was planning to reshuffle his cabinet and party executives, but those plans were no longer valid, Nikai said. Fumio Kishida, a former foreign minister, is competing for the party leader post. On Thursday, Kishida criticised Suga"s coronavirus response and urged a stimulus package to combat the pandemic. "Kishida is the top runner for the time being but that doesn"t mean his victory is assured," said Koichi Nakano, political science professor at Sophia University. Nakano said popular Administrative Reform Minister Taro Kono could run if he gets backing of his faction leader, Finance Minister Taro Aso, while former defence minister Shigeru Ishiba could also run but looks at a disadvantage. Unlike last year, grassroots LDP members will vote along with the party"s members of parliament, which makes the outcome of the party leader race harder to predict. Novice MPs, fearful of losing their seats, may be wary of following their elders" orders. "It was a surprise, but it provided more certainty and forward-looking prospects rather than uncertainty, as the market had been informed of Kishida"s policies such as expansionary fiscal policy," said Daiju Aoki, chief Japan economist at UBS SuMi TRUST Wealth Management. Suga"s image as a savvy political operator capable of pushing through reforms and taking on the stodgy bureaucracy propelled his support to 74 percent when he took office. Initially, populist promises such as lower mobile phone rates and insurance for fertility treatments were applauded. But removing scholars critical of the government from an advisory panel and compromising with a junior coalition partner on policy for healthcare costs for the elderly drew criticism. His delay in halting the "Go To" domestic travel programme - which experts say may have helped spread coronavirus around Japan - hit hard, while the public grew weary of states of emergency that hurt businesses.