* Intel climbs on earnings, outlook
* Bank of America profit drops; stock slips
* Time Warner rebuffs $80 bln bid from 21st Century Fox
* Indexes up: Dow 0.2 pct, S&P 0.15 pct, Nasdaq 0.12 pct (Updates to midday)
By Chuck Mikolajczak
NEW YORK, July 16 (Reuters) - U.S. stocks edged up on Wednesday, buoyed by the latest merger news, but pulled back from earlier highs as investors sifted through the latest batch of corporate earnings.
Merger and acquisition activity continued to thrive on Wall Street. Time Warner shares jumped 16.4 percent to $82.63 as the best performer on the S&P 500 after Twenty-First Century Fox confirmed it made an $80 billion takeover offer for the company that was turned down. Twenty-First Century Fox shares lost 5.2 percent to $33.37.
Also supporting gains was chipmaker Intel, which climbed 6.7 percent to $33.85 following second-quarter results that topped analysts' estimates. The company also forecast third-quarter revenue above Wall Street's expectations.
"It's a combination of M&A that has been pretty consistent - about every day we wake up to at least one, if not two deals - and earnings have continued to be good," said Bill Stone, chief investment strategist at PNC Wealth Management in Philadelphia.
"Things have started off pretty well, we haven't seen a whole lot outside of the financials but the few we have seen have been pretty good."
A partnership struck between IBM and Apple Inc helped boost indexes. IBM will exclusively sell iPhones and iPads loaded with applications geared at enterprise clients this fall. IBM shares gained 2.1 percent to $191.53 as the Dow's biggest boost, while Apple advanced 1 percent to $96.24.
The S&P technology sector gained 0.8 percent.
Bank of America lost 2.2 percent to $15.48 after the second-largest U.S. bank by assets reported a 43 percent drop in second-quarter profit as mortgage revenue fell and litigation costs increased. The bank has also offered $13 billion to settle a probe into mortgage securities it sold, the Wall Street Journal reported.
Yahoo shares slumped 5 percent to $34.03 after disappointing results and outlook, although the company pledged to pay shareholders at least half the proceeds from Alibaba Group Holding Ltd's IPO-BABA.N mega-IPO this fall.
The Dow Jones industrial average rose 34.49 points or 0.2 percent, to 17,095.17, the S&P 500 gained 2.89 points or 0.15 percent, to 1,976.17 and the Nasdaq Composite added 5.28 points or 0.12 percent, to 4,421.67.
U.S. Federal Reserve Chair Janet Yellen's testimony as prepared for delivery to the House of Representatives Financial Services Committee on Wednesday was a repeat of remarks from the prior day when Yellen said the economic recovery remains incomplete.
Producer prices rose 0.4 percent in June against expectations of a 0.2 percent increase.
Other data showed industrial production edged up 0.2 in June but fell short of the 0.4 percent estimate. The National Association of Home Builders/Wells Fargo housing market index rose to 53 in July, a six-month high.
S&P 500 companies' profits are now expected to grow 4.8 percent in the second quarter, according to Thomson Reuters data, down from the 8.4 percent growth forecast at the start of April. Revenue is seen up 3.1 percent. (Editing by Bernadette Baum and Nick Zieminski)