Sarajevo television said that the shell fell in the suburb of Alipasino Polje, on the west of the city, shortly before noon.
Witnesses said it exploded in the heart of the marketplace as women with children and elderly shoppers tried to stock up on scarce supplies of fresh bread.
The attack left the marketplace awash with blood and littered with torn limbs. Sources at hospitals, to which wounded were taken in ambulances, trucks and cars, said many were critical and probably would not live.
A United Nations spokesman, Fred Eckhart, whose offices are near by, said: 'For a single shot to land so precisely as it did in the middle of that marketplace, it appears to have been intentionally targeted in that way at these innocent civilians.' But sources with the UN Protection Force said the shell could have been fired by either a tank or an artillery piece.
It was impossible to say whether the marketplace had been targeted, or if the shell came from the Serbian or Bosnian side.
Croatian troops have dug up three mass graves containing about 200 mostly Muslim civilians who, they say, were shot by Serbian irregulars in south-west Bosnia two months ago, Reuter reports.
Dr Osman Kadic, a Mostar pathologist, said: 'Most of them are Muslims but there are also some Croats.' Almost all of had been shot at close range with automatic weapons, he added. He said that the corpses were about two months old and ranged from 20 to 70 years old.
Radovan Karadzic, the Bosnian Serb leader, denied any Serbian involvement.
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