NEW YORK, NOV. 16 -- Stocks edged higher on Wall Street today in an advance that was tempered by nagging worries about federal budget negotiations in Washington.

The Dow Jones industrial average of 30 blue-chip stocks, up more than 30 points in the first half hour of trading, finished 14.09 points above Friday's close at 1949.10.

Advancing stocks outnumbered declining issues by 5 to 4 on the New York Stock Exchange, where volume totaled 164.34 million shares, down from 174.92 million on Friday.

Optimism that Congress and the White House would soon agree on a plan to cut the budget deficit had spurred the market to its early gains, but prices retreated steadily from those highs as traders got mixed signals from Washington.

In a speech today to the American Council of Life Insurance, President Reagan repeated his pledge to reach a budget settlement with Congress, while also reaffirming his opposition to tax increases.

His steadfast stance, coupled with mounting opposition to cuts in spending programs under negotiation, left the markets wondering whether a compromise was truly in sight.

Traders said that remarks by Federal Reserve Board vice chairman Manuel Johnson that the Fed "must be in a position to withdraw liquidity if the situation demands it" also hurt stock prices.

In the bond market, prices were mixed in quiet trading with longer maturing government securities rising in value but others showing little change.

The dollar strengthened on foreign exchange markets around the world, moving above 137 yen in New York, from below 136 yen late Friday.

The dollar's rebound from record lows last week was enough to push stock prices higher on the Tokyo Stock Exchange. The 225-issue Nikkei Stock Average rose 167.18 points in very light trading, finishing the day at 22,615.43.

Dealers said many major participants stayed away from the Tokyo markets due to caution over the lack of results in the budget talks.

Prices on the London Stock Exchange finished well off their highs of the day. The Financial Times-Stock Exchange 100-share index rose 6.4 points to close at 1,684.7 after gaining more than 50 points earlier in the day.

Elsewhere, stock prices moved higher in Zurich, Brussels, Stockholm, Milan, Paris and Amsterdam, but West German stocks finished mixed in Frankfurt amid doubts that the dollar could hold its recent gains.

Although scars remain from Black Monday, Wall Street traders appeared cautiously optimistic as they began their fifth week of business since the collapse of Oct. 19.