Warm the wet ingredients. Place the water, milk, and butter in a microwave-safe bowl or measuring cup. Microwave on low for 90 seconds until the mixture is warm but not hot.
Prepare the dough. In a large mixing bowl or the bowl of your bread machine, combine the warm water mixture, eggs, sugar, flour, salt, and yeast. Then, knead the dough using a stand mixer with a dough hook attachment or a bread machine on the dough cycle. The dough will start wet but become smooth and stretchy as you knead it. If it's too sticky, add more flour, one tablespoon at a time, until it forms a sticky but cohesive ball.
Incorporate add-ins. Once the dough is smooth and elastic, gently knead in the chocolate chips and chopped cherries until they are evenly distributed. If you're using a bread machine, add these during the kneading cycle's last 1-2 minutes.
First rise. Transfer the dough to a clean, lightly oiled bowl. Cover it with plastic wrap and let it rise for 1 hour in a warm room until doubled in size.
Shape the dough. Turn the dough out onto a lightly floured surface. Divide it into 8 equal pieces and gently shape each piece into a round ball. If the dough sticks to your hands, lightly spray them with cooking spray.
Arrange in a pan. Place the dough balls in the loaf pan, arranging four balls on the bottom and four on top. Cover the pan with heavily greased plastic wrap and let it rise for 45 minutes at warm room temperature until the dough balls have risen and are touching each other.
Prepare for baking. Towards the end of the rising time, preheat your oven to 350°F (175°C) and place the oven rack in the center position.
Bake the bread. Brush the top of the risen dough with the beaten egg and sprinkle with sparkling sugar. Bake for 35-45 minutes, until the loaf is a deep golden brown and the internal temperature reaches 195°F (90°C).
Cool the bread. Remove the bread from the oven and run a butter knife along the edges to loosen it. Turn the loaf out onto a wire rack to cool completely before slicing.