Add the first 8 ingredients to a 1-1/2- or 2-pound bread machine according to the manufacturer's directions. Select the dough cycle. When cycle is complete, remove dough. Punch down. Cover and let rest for 10 minutes.
On a lightly floured surface, roll dough into a 20x10-inch rectangle. Cut rectangle in half lengthwise to make two 20x5-inch rectangles. Sprinkle the white baking pieces down the center of one of the rectangles. Sprinkle the semisweet chocolate pieces down the center of the other rectangle. Brush edges of dough with water. Fold long sides of dough over filling; seal edges. Gently roll the dough into ropes.
Place the filled ropes, seams down, 1 inch apart on a greased large baking sheet. Twist the ropes together; press ends together. Curve one end to form a candy cane shape. Cover and let rise in a warm place for 45 to 60 minutes or until nearly double.
Bake in a 350 degree F oven about 25 minutes or until bread sounds hollow when lightly tapped. Remove from baking sheet; cool slightly on a wire rack.
In a small bowl combine powdered sugar and a few drops peppermint extract. Stir in enough milk (2 to 4 teaspoons) to make a glaze of drizzling consistency. For white glaze, reserve half of the mixture. For pink glaze, stir 1 drop red liquid food coloring into the remaining mixture. Drizzle white and pink glaze over loaf. If desired, sprinkle with coarse sugar. Serve warm.