Euro zone leaders and banks are close to reaching a deal on a 50 percent writedown for private bondholders on their Greek debt, an EU source said on Thursday.

Negotiations at a summit meeting of euro zone leaders were centred on agreeing a writedown or haircut with private bondholders on a voluntary basis.

Euro zone states want private investors to accept the haircut in an effort to reduce Greece's debt burden by about 100 billion euros.

Failure to agree on a voluntary writedown could lead to a full-scale default in Greece's debt, with a heavy knock-on impact on markets.

(Reporting by John O'Donnell and Andreas Rinke; editing by Rex Merrifield)