Scovill Inc., the Waterbury, Conn.-based company that makes Hamilton Beach appliances and Yale locks, received a sweetened bid worth about $520 million yesterday from First City Properties Inc., a company controlled by the Belzberg family of Canada.

Sources involved in negotiating the deal said the offer is expected to be approved over the weekend by Scovill's board of directors. The Belzberg's $42.50-a-share offer announced yesterday replaces their $35-a-share bid last month, which was rejected as inadequate by Scovill's directors.

Sources said Scovill Chairman William Andrews supports the offer and will recommend to directors that they approve the bid for the company. The company is expected to be run as a Belzberg subsidiary with current management remaining, since the Belzbergs do not have an operating management team that could run Scovill.

Scovill, the second-most-active stock on the Big Board yesterday, closed at 42 1/4, up 2, as more than 2 million shares changed hands. The stock has been rising in recent weeks in anticipation of the announcement that directors would support a sale of the company at the right price.

Sources said competing bids for the company were solicited prior to yesterday's disclosure that the Belzberg brothers -- Samuel, William and Hyman -- had made the best offer. The sweetened bid followed negotiations between the Belzbergs and Scovill's investment advisers, Morgan Stanley & Co. and Morgan Lewis Githens & Ahn Inc.

The Belzberg's First City Properties subsidiary, FCP Acquisition Corp., will make a tender offer for Scovill shares that will expire on Jan. 18 at midnight unless it is extended. First City plans to begin purchasing shares on Jan. 12.

Commerce Secretary Malcolm Baldridge is a former chairman of Scovill.

If the deal is completed, it will be the first acquisition of an operating company in the United States by the Belzbergs, who previously concentrated their ownership in financial firms. In recent years, the Belzbergs have been involved, as investors, in takeover bids, including that for Gulf Corp.

Standard & Poor's Corp. announced yesterday that it has placed the Belzberg's First City Properties company on its creditwatch list. S&P said the company's bid for the oustanding shares of Scovill, a major unrated consumer products firm, has negative implications for First City's $150 million of unrated debt.

Scovill is an attractive takeover target because the company has strong brand names, especially Hamilton Beach and Yale, and a strong balance sheet. The company also makes industrial products through its Schrader Automotive Group and Schrader Bellows Automation Group. Its Nu Tone Housing Group makes exhaust fans, intercoms, heaters, door chimes and bath cabinets.

Scovill reported a 1983 profit of $27.4 million ($2.53 a share) on sales of $742.6 million.

In the first nine months of 1984, Scovill had sales of $616.7 million and net income of $24.6 million ($2.02), compared with sales of $531.5 million and profits of $16.2 million ($1.55) for the same period of 1983.