UPDATE 2-Aviva sales drop, capital buffer helps shares

* Life & pensions sales 24.1 bln stg vs 24.8 bln forecast

* Outlook for profitability "good", margin stable at 2.1 pct

* Shares up 7 pct in early trading, solvency helps

(Adds analyst quotes, background, detail, shares)

By Clara Ferreira-Marques

LONDON, Nov 4 (Reuters) - Consumer caution dented British insurer Aviva's (AV.L) nine months sales on Wednesday, although its shares rallied on the company's modestly positive outlook and strong capital buffer.

The country's second-largest insurer said life and pensions sales fell 11 percent to 24.1 billion pounds ($39.70 billion) -- just below an average forecast of 24.8 billion -- hit by a weaker than expected performance at home, where sales dropped 25 percent, and at its previously fast-growing U.S. business.

Aviva has said it is focusing on profitable business over volume, and new business margins were broadly stable over the period at 2.1 percent, compared with 2.0 percent a year ago.

It said the outlook for profitability was "good", but cautioned its base case was slow growth from 2010, with little hope of a recovery feeding into sales for another six to nine months for most of its core businesses, including Britain.