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Elastic and magnetic properties of ultra-thin iron films on tungsten(110) are investigated. In situ film stress measurements during growth show stress values of 25 GPa per deposited monolayer. Our experiments indicate that the tremendous film stress triggers the formation of a misfit dislocation network at a coverage of 1.5 monolayers. The effect of the film stress and its spatial variation on the magnetic behavior are discussed. We find an high coercivity of order 0.3 T for 1.5 monolayer thick films. A model is presented that explains the high coercivity in terms of strong domain wall pinning.