Homo sapiens sapiens did not have children with Neanderthals according to researchers at the Max Planck Institute for Evolutionary Anthropology who have been analyzing Neanderthal DNA.
There has long been speculation on this issue. These findings, if true, show that contemporary human beings are all Africans who developed in Africa recently (100,000 years ago?).
Such a finding would explain why there is so little genetic variation between, say, East Asians and West Europeans– there hasn’t been time for them to diverge very much. If we were descended in part from an older species such as Neanderthals, there would be more variation across continents. As it stands, the greatest difference is between east and west Africans, because they split longest ago.