Banking stocks were among the worst performers in London on Tuesday with Lloyds sinking after the government began to sell-off its stake in the lender five years after its state bailout back in 2008.The UK Financial Investments, the company that manages the government's investments in Lloyds and fellow state-backed lender RBS, placed a 6% stake in Lloyds this morning, selling shares to institutional investors at a 3.1% discount to yesterday's closing price.The sale of 4.3bn shares at a price of 75p each, which raised around £3.2bn for the Treasury, reduced its shareholding from about 38.7% to approximately 32.7%. "The simple manner in which the shares were placed will no doubt be welcomed by investors," said analysts at Jefferies. "We can only hope that the rest of the government's stake in Lloyds and RBS is disposed of in such an effective manner."RBS was also lower on Tuesday after UBS downgraded its rating on the stock from 'buy' to 'neutral'. The broker said it likes the bank's improving fundamentals - "under a new 'business-focused' management team" - but reckons that its valuation is up with events."With political uncertainty still remaining, there are likely to be better entry points for the stock," the Swiss bank said.Barclays was also lower after it was reported on Monday that it is facing a £50m fine for allegedly breaching market listing rules over its capital raisings.The bank also said yesterday that its adjusted income for July and August was lower than in the same period of the previous year, resulting in a 5% year-on-year decline in adjusted income for the eight-month period to August 31st.UBS reiterated its 'neutral' recommendation for the stock today, saying: "Barclays trades below tangible book value, although the expectation that returns will remain below the cost of equity for some time limits the scope for a re-rating."Emerging markets-focused banks Standard Chartered and HSBC were also firmly lower this afternoon.Top performing sectors so far todayGas, Water & Multiutilities 5,856.59 +0.73%Beverages 14,828.50 +0.39%Food Producers & Processors 6,895.54 +0.34%Personal Goods 25,858.86 +0.32%Oil Equipment, Services & Distribution 24,027.84 +0.12%Bottom performing sectors so far todayElectronic & Electrical Equipment 4,033.97 -2.25%Industrial Metals & Mining 1,600.56 -2.10%Industrial Transportation 3,206.03 -1.65%Banks 4,995.47 -1.54%Mobile Telecommunications 4,930.17 -1.13%BC