* Merck to buy Idenix; Analog to purchase Hittite
* Apple sees heavy trading following stock split
* CBOE Volatility Index up, day after hitting lowest sinceFeb '07
* Dow up 0.1 pct; S&P 500 down 0.01 pct; Nasdaq up 0.2 pct (Updates to late afternoon)
By Caroline Valetkevitch
NEW YORK, June 9 (Reuters) - U.S. stocks were nearly flat onMonday after the Dow and S&P 500 hit intraday record highs againon more deal news, while Wall Street's fear gauge rebounded.
The CBOE Volatility index gained 6.3 percent to11.41 after falling on Friday to its lowest level since February2007. The VIX remains at nearly half of its historical average,which some analysts worry is a signal that the market is notfully accounting for issues that could derail the rally.
The S&P 500 and Dow have repeatedly hit record highs inrecent sessions. If the S&P 500 ends Monday's session higher, itwill mark its 11th rise of the past 13 sessions, and its seventhrecord close of the past eight trading days.
There's "still skepticism about this rally, so consequently,we're not in an overbought position here," said Bucky Hellwig,senior vice president of BB&T Wealth Management in Birmingham,Alabama.
Merger activity gave investors a reason to buy some stockson Monday. Merck & Co said it has agreed to buy IdenixPharmaceuticals Inc in a deal valued at about $3.85billion. Analog Devices Inc said it would buy HittiteMicrowave Corp in a deal valued at $2 billion.
Tyson Foods Inc prevailed over Pilgrim's Pride Corp in a bidding war over Hillshire Brands Co,offering to buy the maker of Jimmy Dean sausages for $8.55billion, including debt.
Shares of Idenix, which has three drugs in development totreat hepatitis C, more than tripled, soaring 231.2 percent to$23.95 on heavy volume. In contrast, Gilead Sciences the maker of the market-leading hepatitis C treatment, Sovaldi,fell 4.1 percent to $79.04. Gilead was the biggest negativeinfluence on the S&P 500 and Nasdaq.
Hittite jumped 28.6 percent to $77.89. Hillshire rose 5.4percent to $62.10. Merck, a Dow component, dipped 0.02 percentto $57.84. Analog gained 5 percent to $55.34. Tyson slid 5.6percent to $37.89.
The Dow Jones industrial average rose 8.38 points or0.05 percent, to 16,932.66. The S&P 500 slipped 0.15point or 0.01 percent, to 1,949.29. The Nasdaq Composite added 6.74 points or 0.16 percent, to 4,328.14.
Earlier, the Dow set an intraday record high at 16,970.17,while the S&P 500 touched an all-time intraday high at 1,955.55.
Apple Inc was the Nasdaq's most active name, rising1.5 percent to $93.58 in heavy volume in the tech titan's firsttrading session after a seven-for-one stock split.
On Friday, Nikkei news service reported that Apple waspreparing to sell its first wearable device in October, aimingto produce 3 million to 5 million smartwatches a month in itsinitial run.
Family Dollar Stores Inc jumped 13.6 percent to$68.75 as the S&P 500's biggest percentage gainer after hedgefund billionaire Carl Icahn disclosed late on Friday a 9.39percent stake, making him the discount retailer's largestshareholder. Dollar General Corp rose 7.9 percent to$62.56.
(Additional reporting by Ryan Vlastelica; Editing by JanPaschal)