Apple French Toast

In a large skillet over medium heat, melt butter. Add apples and 1/4 teaspoon nutmeg and cook until apples begin to brown, about 5 minutes. Add 2 tablespoons water and granulated sugar; stir to coat apples. Cook until fruit is tender, about 5 more minutes, then set aside. Heat a griddle or large skillet over medium heat. Heat oven to 350 degrees F. Fit a baking pan with a wire rack; set aside. Make a 2-inch slit into each bread slice to create a pocket. Stuff about 3 tablespoons apple mixture into each bread pocket; press to close. In a large, shallow bowl, whisk together eggs, milk, cinnamon, salt and remaining 1/2 teaspoon nutmeg. Brush griddle with butter. Dip bread slices into egg mixture; cook until golden, about 2 minutes per side. Transfer to prepared baking pan; bake batch until heated through, 12 to 15 minutes. Sprinkle with confectioners' sugar.