Mix flour, baking powder, cinnamon and salt in large bowl. Beat egg in small bowl; stir in applesauce, sugar, milk and oil. Add to flour mixture; stir just until moistened. (Batter will be lumpy.) Stir in cereal and walnuts.
Pour into 9×5-inch loaf pan sprayed with cooking spray.
Bake at 350°F for 55 minutes or until toothpick inserted in center comes out clean. Cool 10 minutes; remove from pan. Cool completely on wire rack.