* Allergan, Pfizer drop after biggest-ever healthcare deal
* Alcoa up as Elliott takes stake
* Energy stocks helped by Saudi move to stabilize prices
* Indexes up: Dow 0.07 pct, S&P 0.22 pct, Nasdaq 0.31 pct (Adds details, updates prices)
By Abhiram Nandakumar
Nov 23 (Reuters) - Wall Street edged higher in late morning trading on Monday, helped by gains in materials and energy stocks, but trading was subdued in the run-up to Thursday's Thanksgiving holiday.
Crude oil prices recovered from earlier losses after Saudi Arabia agreed to cooperate with other producers to stabilize prices. The S&P energy sector was up 0.83 percent.
Pfizer's shares fell 3 percent to $31.20, after the company said it would buy Allergan in a deal valued at about $160 billion, the biggest ever in the healthcare sector. Allergan fell 2.4 percent to $305.06.
The two stocks were the biggest drags on the S&P 500, while Pfizer was the biggest drag on the Dow.
Analysts expressed concerns about what were seen as the low synergies from the deal, its complexity, antitrust issues and a possible delay in Pfizer's plan to split in two companies.
But healthcare stocks stayed positive, helped by a gains in insurers.
U.S. stocks are coming off a strong week, with the S&P 500 recording its best performance this year and the Dow Jones industrial average turning positive for the year.
"We're coming off a very strong performance, a market that has shown tremendous resilience and a strong propensity of 'coming back'," said Andre Bakhos, managing director at Janlyn Capital LLC in Bernardsville, New Jersey.
"Chances are, the bulk of the action will take place Monday and Tuesday and then (traders) will turn their machines off," he said, adding trading was likely to be "very quiet" this week.
Exxon was up 0.4 percent and Chevron 0.7 percent.
At 11:23 a.m. ET (1623 GMT), the Dow Jones industrial average was up 12.16 points, or 0.07 percent, at 17,835.97, the S&P 500 was up 4.62 points, or 0.22 percent, at 2,093.79 and the Nasdaq Composite index was up 15.98 points, or 0.31 percent, at 5,120.90.
Eight of the 10 major S&P sectors were higher, underpinned by the 0.82 percent rise in the materials sector, which was boosted by Alcoa's 5.4 percent rise.
Elliott Management disclosed a 6.5 percent stake in the "undervalued" aluminum maker.
GameStop tumbled 11.7 percent to $34.66 after the video games retailer reported lower quarterly sales and profit.
Mallinckrodt jumped 9 percent to $66.48 after the biopharmaceutical company posted a jump in sales.
Kellogg rose 3.2 percent to $68.38 after Credit Suisse raised its rating to "outperform".
Advancing issues outnumbered decliners on the NYSE by 1,980 to 927. On the Nasdaq, 1,648 issues rose and 998 fell.
The S&P 500 index showed 21 new 52-week highs and four new lows, while the Nasdaq recorded 49 new highs and 48 new lows. (Reporting by Abhiram Nandakumar in Bengaluru; Editing by Savio D'Souza and Ted Kerr)