TOKYO - Japanese Prime Minister Yoshihide Suga told reporters on Wednesday that he had no plans to dissolve the country's lower house, in the latest turn of political drama as he fights to hold onto his job.

Domestic media reported this week that he intended to dissolve the lower house of parliament in mid-September and was considering holding the general election on Oct. 17.

Suga's denial of these reports comes after several days of tense negotiations and sudden twists involving Suga and the most powerful politicians in the ruling camp as the unpopular prime minister manoeuvres to stay in the top job.

"We can't dissolve the lower house in this current situation," said Suga, speaking of the severity of the coronavirus pandemic.

When asked whether that meant he would let members of the lower house of parliament serve their full terms, which end Oct. 21, Suga avoided a direct answer.

"There are no plans to push back the Liberal Democratic Party leadership election, and we will work around the dates available for the general election," he said. The LDP leadership race is slated to be held on Sept. 29.

A senior LDP official told Reuters that Suga was weighing a party executive and cabinet reshuffle early next week. He added that the cabinet reshuffle would be small scale.

On Tuesday, media said Suga planned to remove long-term party ally and current LDP Secretary General Toshihiro Nikai from his post as part of the reshuffle.

Nikai threw his backing behind Suga and helped him win the top post in the turmoil to succeed former premier Shinzo Abe last September. But some parliamentarians have voiced their unease with the amount of power wielded by 82-year-old Nikai, who has held his post since August 2016 - the longest in the party's history.

Local media have also reported that Suga is seeking to dissolve the lower house in hopes of holding the LDP leadership race after the election, given that he has struggled to solidify support in the party and that other contenders like Fumio Kishida appear positioned to gather the votes of those opposing him.

Suga's support ratings are at record lows, as he failed to capitalise on delivering the Olympics amid a fresh wave of coronavirus infections. The government has since declared a fourth state of emergency in most of Japan.

The LDP and its allies are not expected to lose their coalition majority in the powerful lower house in the next general election, but forecasts suggest that the party could lose its outright majority, an outcome that would weaken the LDP leader.

Despite the dour forecast for the LDP, the Nikkei average gained 0.89% to 28,337.71 on Wednesday, hitting its highest level since mid-July.

Historically, the market has performed well after the parliament is dissolved.

"While things seem very fluid, some people think that political uncertainty has diminished on the grounds that Suga is likely to win the upcoming ruling party leadership election," said Naoya Oshikubo, senior strategist at Sumitomo Mitsui Trust Asset Management.

(Reporting by Sakura Murakami, Yoshifumi Takemoto; Additional reporting by Hideyuki Sano; Editing by Tom Hogue and Gerry Doyle) ((Sakura.Murakami@thomsonreuters.com;))