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Pour the milk and water into the bread machine pan. If the instructions for your machine specify that the yeast is to be placed in the pan first, reverse the order in which you add the liquid and dry ingredients.
Sprinkle the flour over, ensuring that it covers the water. Add the salt, sugar and butter in separate corners of the bread pan. Make a shallow indentation in the center of the flour (but not down as far as the liquid) and add the yeast.
Set the bread machine to the basic/normal setting, medium crust. Press Start.
Remove the bread at the end of the baking cycle and turn out onto a wire rack to cool.