Preheat oven to 400ºF.
Arrange 8 slices of bread in bottom of a 9 X 13-inch baking dish, squishing slices together to make one layer; sprinkle blueberries and peaches over top.
In a medium bowl, whisk together milk, egg, granulated sugar, cinnamon and vanilla extract. Pour half of milk mixture over fruit; top with remaining 8 slices of bread. Pour remaining milk mixture over bread; using a spatula, press top layer of bread slices down to saturate with milk mixture.
Cover dish with aluminum foil and bake 20 minutes; uncover dish and bake until egg mixture is set and top is golden brown, about 10 minutes more. Cool slightly before sifting powdered sugar over top. Slice into 8 pieces and serve. Yields 1 slice per serving.