What is this code?

Looks like malware to me, which may mean you’re hacked.

If you’re hacked you need to start working your way through these resources:

http://codex.wordpress.org/FAQ_My_site_was_hacked
http://wordpress.org/support/topic/268083#post-1065779
http://smackdown.blogsblogsblogs.com/2008/06/24/how-to-completely-clean-your-hacked-wordpress-installation/
http://ottopress.com/2009/hacked-wordpress-backdoors/
Additional Resources:

http://sitecheck.sucuri.net/scanner/
http://www.unmaskparasites.com/
http://blog.sucuri.net/2012/03/wordpress-understanding-its-true-vulnerability.html

The Wordfence Plugin allows you to run a scan and it compares core, plugin, theme and if you want all other files even outside of WP for a) changes vs the repository and of course for malware. It´s free.
http://wordpress.org/plugins/wordfence/

It found it in index.php file.

Removing the problem from just 1 file may not be enough. You need to completely delouse the site by following the links above – otherwise the hacker may simply walk straight back in again.