Czech crown holds at 1-wk lows, seen on back foot

...dampened the appeal of European Union's lowest-yielding currency.

The crown traded at 27.730 per euro by 0750 GMT, down 0.1 percent from the previous domestic close and not far off a low of 27.810 reached overnight.

The crown has retreated from a 7-1/2-month high of 27.460 hit last Friday as global markets showed signs of stabilisation after financial turbulence sparked by a squeeze on credit.

Global equities extended gains on Thursday as growing hopes the worst of the recent credit market storm may be past fuelled appetite for riskier assets, hurting government bond prices and sending the low-yield yen lower [ID:nL23574994].

"This should cause the low-yield crown to come under further selling pressure and push it towards important resistance levels around 28.85 per euro," currency analysts at CSOB bank said in a morning note to clients.

The Prague bourse rose 1.8 percent , rebounding further from Friday's 5-month low.

The Czech policy rate of 3 percent is the lowest in the European Union, making the crown a popular source of funds for investors seeking to benefit from investing into high-yielding currencies in central Europe and in other emerging markets.

As the crown slid along with the yen to give back part of the strong gains made since early July, other central Europe's currencies extended their recovery from Wednesday.

Hungary's forint was up quarter of a percent to the euro , the Polish zloty traded 0.2 percent higher and the Slovak crown inched up 0.1 percent .

[PRAGUE/Reuters/Finance.cz]