In bread machine pan, place the first seven ingredients in order suggested by manufacturer. Select dough setting (check dough after 5 minutes of mixing; add 1 to 2 tablespoons of water or flour if needed).
When the cycle is completed, turn dough onto a floured surface. Divide in half. Shape each portion into a ball; flatten slightly. Place in two greased 9-in. round baking pans. Cover and let rise until doubled, about 45 minutes.
Beat egg and water; brush over the dough. Sprinkle with Italian seasoning if desired.Bake at 350° for 20-25 minutes or until golden brown. Remove from pans to wire racks to cool. Yield: 2 loaves (16 slices each).