Method 1 seems like it'd be faster. Method 2 will have to spit out a bunch of CONCAT
opcodes for each iteration of the loop, and the very long string will be built in memory until you're ready to send it. Method 1 on the other hand will just be two ECHO
opcodes per loop, and then PHP/your webserver is free to flush content to the client before you've fully finished, if it wants to.
Of course, if you're concerned about micro-optimisation, you're going to get far better performance by using an opcode cache, caching proxy, or something like hiphop.