What do you mean by "sexual tendencies?" If you are just talking about hugs from affection, that's pretty normal and might not even be a "sexual tendency." If you are talking about rubbing up against the other kid, it is possible that it is not understood by the child as "sexual" per se but he is just doing something that feels good to him. If you are talking about something more overt, and in any case, he's old enough to learn about private parts and private touching and it not being OK to do to another person.
Curiosity. But you need to explain to them that its not ok.
...usually, because the child has been exposed (visually and/or physically) to something of a sexual nature and is mimicking what he saw.