Moscow, Russia (CNN) -- A car bomb exploded Thursday in the Russian republic of North Ossetia, killing at least 17 people -- including an 18-month-old baby -- and wounding up to 123 others, local health officials said.
The vehicle blew up near a market in the city of Vladikavkaz, the republic's leader, Taimuraz Mamsurov, told the Interfax news agency.
"Information that I possess indicates that the explosion in Vladikavkaz was organized by a suicide bomber, who drove a Volga 3102 car to near the entrance to the market," Mamsurov said.
The injured included 10 people in critical condition and 90 in serious condition, health officials said.
Investigators said the explosive device contained the equivalent of 40 kilograms of TNT.
The bomb was placed inside a vehicle parked at the entrance to the central market in downtown Vladikavkaz, with a suicide bomber sitting inside the car, said the Investigative Committee of the Russian Prosecutor's Office, which qualified the attack as a "terrorist act." The device detonated at 11:20 a.m. (3:20 a.m. ET).
The committee also said the bomb was stuffed with various pieces of metal to increase the human damage. A natural gas canister, stored in the car's trunk, also detonated, the committee said.
The Russian Emergency Situations Ministry is sending special medical planes to Vladikavkaz to airlift heavily injured patients to Moscow's leading trauma clinics.
Friday was declared a day of national mourning in North Ossetia, according to a local government decree. Flags on all regional buildings will fly at half-staff and all entertainment programs on local TV will be cancelled as well as concerts and theater performances.
Russian President Dmitry Medvedev, speaking on national TV, pledged that all organizers of the deadly bombing will be identified and punished -- or killed.
"We will do all we can to catch these monsters and animals ... who have committed a terror attack, a barbaric terror attack, against ordinary people. We will do all we can to find and punish them in accordance with the laws of our country, and we will destroy them if they offer resistance or in other circumstances," Medvedev said.
Meanwhile, the owner of the car used in the bomb attack has been identified and arrested, a local police official told the Interfax news agency. The detainee claims that he sold it to an unknown buyer on Wednesday, the policeman said.
The Russian government announced each family of those killed will receive 1 million rubles in compensation (more than $32,000).
Russian Prime Minister Vladimir Putin also condemned the bombing, saying, "The crimes like the one that was committed in the North Caucasus today are aimed at sowing enmity between our citizens. We have no right to allow this."
North Ossetia and the rest of the Caucasus region have been plagued with violence and political instability.
The market has seen other terrorist attacks in the past.
In November 2008, a suicide bomber blew up a bus at a nearby bus station, killing 12 people and wounding more than 40. An explosion killed more than 50 people and wounded 300 in March 1999.
CNN's Maxim Tkachenko contributed to this report.