By Simon Challis, European Insurance and Funds Correspondent

LONDON (Reuters) - More deals to transfer the costly pension liabilities of British firms to insurers are likely in the coming months, after a recent flurry of transactions suggest the much-hyped market may at last be set to ignite.

Shipping firm P&O said on Friday it had done a deal to transfer 800 million pounds of pension liabilities to buyout insurer Paternoster, thought to be the biggest deal so far.

It follows hard on the heels of similar deals done by Paternoster with UK oil firm Lasmo and media group Emap EMA.L, while rival Legal & General (LGEN.L: Quote, Profile, Research) has also been active, say consultants.

The recent flurry of deals may indicate that the 1 trillion pound buyout market for Britain's defined-benefit company pensions is moving up a gear after a slow start.

"I think we are seeing the market taking off," Mark Wood, CEO of Paternoster, told Reuters.

"The the fourth quarter will be a multiple of what it was in 2006," in terms of volume of deals done, said Wood. "In fact we have probably seen more than 2 billion in trade (in the market as a whole) in the first two weeks of December alone."

More -- and bigger -- deals are likely in the coming weeks, as companies scramble to complete transactions by the end of their financial years, say consultants.

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