The bombing in mostly Orthodox Christian North Ossetia is a fresh blow to the Kremlin, which is struggling to rein in a growing Islamic insurgency in the neighboring regions.

Thursday marked one of the volatile region's worst attacks in years.

Russian leaders condemned the attack and vowed to severely punish those responsible.

Dmitry Medvedev, Russian President, said, "This blast is the latest outbreak of criminal activity from terrorists, with whom there can be no compromise, no truce or anything else."

Within hours of the explosion, a crowd of mourning relatives stood outside a local morgue waiting to identify the victims.

Russia's government announced it will give give families of victims about 33-thousand US dollars in compensation.

All North Ossetia's schools were closed after the blast, and Friday will be an official day of mourning in the province.