Combine 1 cup flour, undissolved yeast, sugar, parsley, salt and garlic powder in a large mixer bowl. Heat milk, water and butter until very warm (120° to 130°F). Add to flour mixture; beat 2 minutes at medium speed of electric mixer, scraping bowl occasionally. Add 1 tablespoon pesto sauce and mix well. Stir in enough remaining flour to make a soft dough. Knead on lightly floured surface until smooth and elastic, about 6 to 8 minutes. Cover dough and let rest 10 minutes.
Roll dough into a 15 x 10-inch rectangle. Spread with 1/2 cup pesto sauce. Beginning at short end of rectangle, roll up tightly as for jelly roll. Pinch seams and ends to seal. Place, seam side down, in greased 9 x 5-inch loaf pan. Cover; let rise in warm, draft-free place until doubled in size, about 60 minutes.
Bake at 375°F for 30 to 35 minutes or until done. Remove from pan; let cool on wire racks.