This error was due to a recent change introduced in AUCTeX (to fix another bug reported in StackExchange network). It has been now fixed upstream, as a temporary fix you can add this line to the beginning of your init file:
However, please note that in version 11.88 of AUCTeX has been introduced a nicely formatted list of errors and warnings that can be accessed with M-x
TeX-error-overview RET, or from the menu
Error Overview. You can navigate between errors with n and p, so you can forget about C-c `.