* Merck to buy Idenix; Analog to purchase Hittite
* Apple sees heavy trading following stock split
* CBOE Volatility Index up, day after hitting lowest since Feb '07
* Dow up 0.1 pct; S&P 500 down 0.01 pct; Nasdaq up 0.2 pct (Updates to late afternoon)
NEW YORK, June 9 (Reuters) - U.S. stocks were nearly flat on Monday after the Dow and S&P 500 hit intraday record highs again on more deal news, while Wall Street's fear gauge rebounded.
The CBOE Volatility index gained 6.3 percent to 11.41 after falling on Friday to its lowest level since February 2007. The VIX remains at nearly half of its historical average, which some analysts worry is a signal that the market is not fully accounting for issues that could derail the rally.
The S&P 500 and Dow have repeatedly hit record highs in recent sessions. If the S&P 500 ends Monday's session higher, it will mark its 11th rise of the past 13 sessions, and its seventh record 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 stocks on Monday. Merck & Co said it has agreed to buy Idenix Pharmaceuticals Inc in a deal valued at about $3.85 billion. Analog Devices Inc said it would buy Hittite Microwave 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 $8.55 billion, including debt.
Shares of Idenix, which has three drugs in development to treat 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 negative influence on the S&P 500 and Nasdaq.
Hittite jumped 28.6 percent to $77.89. Hillshire rose 5.4 percent to $62.10. Merck, a Dow component, dipped 0.02 percent to $57.84. Analog gained 5 percent to $55.34. Tyson slid 5.6 percent to $37.89.
The Dow Jones industrial average rose 8.38 points or 0.05 percent, to 16,932.66. The S&P 500 slipped 0.15 point 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, rising 1.5 percent to $93.58 in heavy volume in the tech titan's first trading session after a seven-for-one stock split.
On Friday, Nikkei news service reported that Apple was preparing to sell its first wearable device in October, aiming to produce 3 million to 5 million smartwatches a month in its initial run.
Family Dollar Stores Inc jumped 13.6 percent to $68.75 as the S&P 500's biggest percentage gainer after hedge fund billionaire Carl Icahn disclosed late on Friday a 9.39 percent stake, making him the discount retailer's largest shareholder. Dollar General Corp rose 7.9 percent to $62.56.
(Additional reporting by Ryan Vlastelica; Editing by Jan Paschal)