Lay bread, buttered side up, in single layer in square glass baking dish (8 x 8 x 2 inches).
Scald milk by heating until bubbles appear around edge.
Slightly beat eggs in large bowl.
Add sugar and vanilla; beat just until blended.
Gradually and gently beat in scalding-hot milk; strain over bread (custard mixture will look foamy).
Sprinkle generously with nutmeg.
Place in center of large aluminum roasting pan (17 x 11 x 2 inches).
Pour enough hot water into pan to come as high as pudding mixture in dish.
Bake in preheated 325 Â°F oven until silver or stainless-steel knife in'serted in center comes out clean, about 40 minutes; chill.
Serve, if desired, with strawberry or raspberry preserves flavored with kirsch.