1 Package yeast
1/3 cup Sugar
2/3 cup Warm water (105-115)
1 cup Toasted skinned hazelnuts**
3 cups Flour
1 teaspoon Salt
1/4 cup Room temperature unsalted butter
1 Egg
1/2 cup Dried cherries or raisins
Icing
Dissolve yeast and 1 teaspoon sugar in water. Let stand until foamy, 5-10 minutes. Place half of hazelnuts in food processor. Whirl until chopped; remove and reserve.
Place remaining nuts in processor along with remaining sugar. Whirl until finely ground. Add the flour, salt and butter to processor. With machine running, add egg and the yeast mix. Whirl until mix forms a ball; whirl 30 seconds more to knead. Transfer dough to a large greased bowl; turn to coat. Cover with a damp cloth. Let rise in warm place, away from drafts, until doubled in bulk, about 1-1/2 hours.
Punch dough down. On lightly floured surface, knead in remaining nuts and the cherries or raisins. Divide the dough in half. Roll each half into a 24″ long rope. Twist the ropes together. On a greased sheet, form the braided loaf into a candy cane shape. Cover with a damp cloth. Let rise in a warm place, away from drafts, until doubled in bulk, about 1 hour.
Preheat oven to 350. Bake for 25-30 minutes or until golden brown and hollow sounding when tapped. Cool bread on wire rack.
Prepare icing. Divide icing in half. Tint half with red food coloring. Drizzle or pipe red and white icings in candy cane stripes over bread.
Icing:
Stir together 1-1/2 cups confectioners sugar and about 2-3 tablespoons milk until blended and good icing consistency.
**NOTE:
To toast hazelnuts, spread nuts on baking sheet. Bake in preheated 350 oven for 8-10 minutes or until toasted. Rub nuts in a clean kitchen towel to remove the skins.