All,
I've done some more searching on the web and found a suggestion to look for cracks on the air intake hose. And indeed, there was a crack which I sealed with duck tape. The car started behaving normally.
There was some unmetered air passing into the system causing the problem. This seems to be pretty common on 626s '88-'92.
Probably when the car jerked and a part of the alternator belt broke the intake hose also might have cracked under the stress. Or may be just due to the heat.
Regards, Mike Jackson