You defined xx to be 260 characters long. Assigning a shorter character literal will result in a padding with blanks. Thus, xx contains A and 259 blanks. yy contains B and 259 blanks. So the concatenated string would be 'A' + 259 blanks + 'B' + 259 blanks, in total 520 characters.
Since zz is only 260 characters long, the rest is cropped.
What you are trying to do is achieved by
zz = trim(xx) // trim(yy)
trim() removes trailing whitespace from strings.
