US STOCKS-Wall St inches up as deal news adds optimism

(Updates to midday, changes byline)

By Caroline Valetkevitch

NEW YORK, April 28 (Reuters) - U.S. stocks edged up on Monday on optimism about a proposed takeover in the candy business even as investor Warren Buffett, one of the deal's backers, gave a bleak assessment of the economic outlook.

Investors also were cautious before Wednesday's Federal Reserve announcement, which could mark the end of a cycle of interest-rate cuts that began last August.

A proposed $23 billion acquisition of Wm Wrigley Jr Co (WWY.N: Quote, Profile, Research), the world's largest chewing gum maker, and a billionaire's bid to increase a stake in Ford Motor Co. (F.N: Quote, Profile, Research) showed investors were still willing to put money in areas that held promise. Wm Wrigley's shares surged 23.2 percent to $76.95 on the New York Stock Exchange.

Buffett, however, told CNBC television that the United States could be mired in a longer and deeper recession than most people think.

Despite some early earnings disappointments, April has turned out to be a strong month so far for stocks. The S&P is at its best level in about three months.

"They're waiting for the (Federal Reserve news) to come out," said Angel Mata, managing director of listed equity trading at Stifel Nicolaus Capital Markets in Baltimore. "There's no need to rush and buy stocks."

The Dow Jones industrial average .DJI was up 20.36 points, or 0.16 percent, at 12,912.22. The Standard & Poor's 500 Index .SPX was up 2.43 points, or 0.17 percent, at 1,400.27. The Nasdaq Composite Index .IXIC was up 5.94 points, or 0.25 percent, at 2,428.87.