* Nikkei books 12.1 pct decline in 2018
* Topix posts 17.8 pct fall in 2018, worst annual loss since 2011
* Energy-related shares broadly fall on overnight dip in oil prices
* Tokyo financial markets to reopen Jan. 4 after new year's break
By Daniel Leussink
TOKYO, Dec 28 (Reuters) - Japan's Nikkei fell on its final trading day of the year on Friday as energy-related shares sagged, leading the index to its first annual loss in seven years.
The Nikkei share average ended the session 0.31 percent down at 20,014.77.
The benchmark index booked a 12.1 percent decline in 2018, its first annual loss since 2011 and breaking the longest winning streak since the late 1980s.
The broader Topix lost 0.50 percent to 1,494.09, and recorded a 17.8 percent decline over the year, its biggest annual loss since 2011.
Wall Street's three main indices staged a strong comeback on Thursday, surging from significant losses to end the session overnight in positive territory.
"U.S. equities were very volatile yesterday. It was a relief they ended positively after all, but because of the volatility it's hard to take risk on the Tokyo market," said Eiji Kinouchi, chief technical analyst at Daiwa Securities.
Japanese investors remained cautious throughout the session on Friday.
Kinouchi said they braced for possible further volatility in U.S. markets and preferred to stay on the sidelines ahead of the start of Japan's long new year holiday.
"Next week, Tokyo will only be open on Friday while New York will only close for New Year's Day," he said.
Energy-related shares weighed on the broader market on Friday after oil prices fell steeply overnight on worries about oversupply and an increasingly muddled outlook for global growth.
Oil refiner Idemitsu Kosan shed 1.4 percent and Showa Shell Sekiyu KK lost 0.9 percent.
Petroleum products major Inpex Corp recovered from a more than 1 percent decline by midday to finish 0.1 percent higher.
Shares of many index heavyweights dipped, with Toyota down 0.1 percent, Sony Corp falling 1.1 percent, and Nintendo losing 0.1 percent.
Uniqlo-operator Fast Retailing was off 0.4 percent while factory automation equipment maker Keyence shed 1.4 percent.
SoftBank Group, which was down 1.1 percent at midday, recovered from earlier losses to finish the session with a 0.3 percent gain.
Twelve out of the Tokyo Stock Exchange's 33 sub-sectors were in positive territory, led by non-ferrous metals and iron and steel.
Reporting by Daniel Leussink; editing by Sunil Nair