* Trading volumes light ahead of Labor Day holiday
* Indexes on track for fourth straight week of gains
* Chicago PMI, consumer sentiment both top forecasts
* Dow off 0.04 pct, S&P up 0.18 pct, Nasdaq up 0.3 pct (Updates to midday trading)
By Chuck Mikolajczak
NEW YORK, Aug 29 (Reuters) - U.S. stocks edged higher in a quiet session on Friday as the latest in a string of positive data pushed investors to extend a rally that had been briefly threatened by overseas concerns, although gains were capped ahead of an extended holiday weekend.
Since falling to a near three-month low on Aug. 7, the S&P 500 is now on track for its 12th rise of the past 16 sessions. It is also set to close out its fourth straight weekly advance and its sixth positive month of the past seven.
Wall Street fell early in the session after Britain introduced a note of caution into the market, raising its international terrorism threat level to the second highest in response to possible attacks being planned in Syria and Iraq.
"Short term, you never know in advance of a holiday weekend, plus given everything else that is going on, people are just being cautious so you are not going to see any big upside," said Randy Carver, president and founder of Carver Financial Services in Mentor, Ohio.
In the latest economic data, business activity in the U.S. Midwest rebounded more than expected in August, signaling a pickup in that region's economy. Separately, U.S. consumer sentiment rose more than expected, according to the final August reading from the Thomson Reuters/University of Michigan Surveys of Consumers.
"From a purely economic standpoint, if I look at the fundamentals, I really think there is some huge growth ahead and people are going to miss the opportunity because they are so focused on the short term stuff that is irrelevant," said Carver.
The Dow Jones industrial average fell 7.16 points, or 0.04 percent, to 17,072.41, the S&P 500 gained 3.5 points, or 0.18 percent, to 2,000.24 and the Nasdaq Composite added 13.53 points, or 0.3 percent, to 4,571.22.
For the week, the Dow is up 0.4 percent, the S&P is up 0.6 percent and the Nasdaq is up 0.7 percent, the fourth straight week of gains for all three. For the month of August, the Dow is up 3.1 percent, S&P is up 3.6 percent and the Nasdaq is 4.6 percent higher. The benchmark S&P index is on track for its best monthly performance since February.
This week's trading volume has been among the lightest of the year, with action especially muted going into the Labor Day holiday in the United States, for which markets will be closed on Monday.
The U.S. shares of AstraZeneca were up 1.9 percent at $75.68 on news the company had moved its immuno-oncology medicine MEDI-4736 into a mid-stage study in colorectal cancer.
Splunk Inc jumped 17.6 percent to $53.25 a day after posting strong revenue growth and raising its full-year sales outlook. (Editing by Chizu Nomiyama, Meredith Mazzilli and Andre Grenon)