Anchor Text - combo image/text link

I was wondering if someone can comment on the following HTML as it relates to anchor text optimization.

I'm using the following code on my category pages, to create links to specific product pages. I combined the image link and the text link within a single <a> tag, so that the text part will "light up" when someone hovers over either the image or the text portion. But now I'm wondering if putting the image code within the <a> tag might be diluting the anchor text effect of the "XYZ Widget" text.

<h3><a href="productpagelink.htm"><img src="productimage.jpg" alt="XYZ Widget" width="125" height="125" border="0"><br>XYZ Widget</a></h3>

Would the following be noticeably better for SEO purposes?

<a href="productpagelink.htm"><img src="productimage.jpg" alt="XYZ Widget" width="125" height="125" border="0"><br>
<h3><a href="productpagelink.htm">XYZ Widget</a></h3>

Thanks!

 

I would go for the second. Just make it as easy for the spider as you can.

I does take href after href and evaluates it so the shorter the anchor text the stronger it gets. Maybe you could get rid of the img link completely to give the anchor text even more 'strenght'.

 

According to SEO.
First options _ Image can't indexed by spiders (only consider alt text)
Second _ Anchor text has more value & easily indexed by Spiders

So better to go for second one.!