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Preheat oven to 325 F. Grease and flour a 12 cup bundt pan. Set aside.
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Stir together milk and wine and then let stand 10 minutes. Set aside.
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Beat the butter and lemon zest at medium speed with an electric stand mixer until creamy. Gradually add the sugar, beating at medium speed until light and fluffy. Add eggs, 1 at a time, beating just until blended after each addition. Beat in the vanilla.
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Whisk together the flour, baking powder, baking soda, and salt. Add to butter mixture alternately with milk mixture, beginning and ending with flour mixture, in 3 and 2 additions. Mix at low speed just until blended after each addition; do not overmix.
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Working quickly but gently, fold the peaches and blueberries into the cake batter.
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Scrape the cake batter into the prepared cake pan.
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Bake for 65-70 minutes, or until a cake tester inserted in the center comes out clean. Cool in pan on a wire rack 10 to 15 minutes; then invert cake onto a wire rack.
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Cool completely before slicing. Sprinkle with powdered sugar before serving.