The attack targeted a cherished tradition that brings millions of Mexicans together in public plazas each year, and cast an immediate pall over Tuesday's parades, held in cities and towns across the nation to celebrate the 1810 start of Mexico's 10-year war of independence from Spain.

Soldiers march during a military parade celebrating Independence Day in Mexico City September 16, 2008. [Agencies]

Godoy canceled Tuesday's march in Morelia after his office received threats, "because there are children, women and innocent people who have been hurt." But parades went on elsewhere, including the traditional military show of force in Mexico City.

Eunice Arevalo, 23, attended that parade with 10 other family members, but she said she was fearful for Mexico's future.

"This is not going to stop. This is only going to get worse," said Arevalo, a cooking student whose father is a soldier. "So far the killers have targeted other drug traffickers, but now it seems we're going to see still more violent acts against everyday citizens, just to shock people."

Calderon urged Mexicans to stand up to the cartel threat, appealing to their patriotism.

"The Mexican people, especially on this important date, should remain united in the face of those who want to divide us," the president said.

A week after nationwide marches designed to symbolically retake the streets from criminals, many echoed his defiance.

"Mexico is ours. We won't hide. We are going to go out and take back our streets," said lawyer Juan Enrique Arguijo, 46.

Morelia remained under heavy guard, with soldiers and federal, state and local police manning checkpoints on surrounding highways. Seventy-five injured were hospitalized, civil protection officials said.

Meanwhile, families mourned the dead. Isabel Sanchez said her brother Alfredo Sanchez was about to retire as a metalworker after surviving a stroke. He was killed amid the crowd as his wife parked the car.

"My brother was fighting to live," she said. "We are tired of living like this. ... I don't understand why my brother died."

The attack comes only days after 24 bodies were found bound and killed execution-style in a rural area outside Mexico City in one of the largest massacres in recent history.