* S&P 500 briefly hits record intraday high
* VIX drops to lowest level in 10 years
* Kate Spade rises on Coach's buyout offer
* Indexes down: Dow 0.03 pct, S&P 0.04 pct, Nasdaq 0.02 pct (Updates to afternoon)
By Noel Randewich
May 8 (Reuters) - The S&P 500 traded flat on Monday after briefly touching record highs, while Wall Street's "fear gauge" dropped to its lowest in over a decade following centrist Emmanuel Macron's victory in the French presidential election.
The CBOE Volatility index dropped nearly 8 percent to 9.73 and was on track for its lowest close since 1993 as investors took comfort from Macron's victory, as well as from strong quarterly reports in recent weeks.
A declining VIX typically indicates a bullish outlook for stocks, but the extreme lows the index has touched are sounding caution for some stock investors.
"It's been here before, but not much lower than this," said Donald Selkin, Chief Market Strategist at Newbridge Securities in New York. "It's signaling that something negative is in the works."
Eight of the 11 major S&P sectors dipped, with the materials index down 0.8 percent and energy rising 0.5 percent on the back of higher oil prices.
The euro hit a six-month high against the dollar after Macron comfortably defeated far-right nationalist Marine Le Pen who had threatened to take France out of the European Union.
"We remain largely constructive of the equity market and view that the path of least resistance is higher," said Bill Northey, chief investment officer at Private Client Group of U.S. Bank.
At 2:31 pm ET, the Dow Jones Industrial Average was down 0.03 percent at 21,000.31 points and the S&P 500 had slipped or 0.04 percent to 2,398.22. The Nasdaq Composite had declined 0.02 percent to 6,099.24.
The S&P 500 briefly touched a record high of 2,399.94. It has not moved more than 0.4 percent in the past 10 trading days, despite a flurry of quarterly earnings.
Shares of Kate Spade jumped 8.2 percent after bigger rival Coach Inc said it would buy the handbag maker for $2.4 billion to increase its exposure to millennial shoppers. Coach shares rose 4.7 percent.
Straight Path surged more than 30 percent to after an unnamed telecommunications company raised its offer to buy the wireless spectrum holder for about $3.1 billion, trumping a bid by AT&T. Sources told Reuters that the bidder was Verizon.
Tyson Foods was the biggest S&P loser, down 6.2 percent after the meat processor reported a slump in quarterly profit.
Declining issues outnumbered advancing ones on the NYSE by a 1.34-to-1 ratio; on Nasdaq, a 1.35-to-1 ratio favored decliners.
The S&P 500 posted 42 new 52-week highs and 4 new lows; the Nasdaq Composite recorded 106 new highs and 48 new lows. (Additional reporting by Yashaswini Swamynathan in Bengaluru; Editing by Nick Zieminski)